Affordable housing is high on the agenda ever since the Abu Dhabi Urban Planning Council (UPC) announced the Middle Income Rental Housing Policy. Cityscape magazine outlines the directive and talks to Mr Mahmood Ebraheem Al Mahmood, chairman of Al Qudra Real Estate, about achieving the UPC’s goal.
In its ongoing efforts to realise the key components of the Vision 2030 urban development programme, the UPC is actively ensuring the provision of quality affordable housing options for the residents of Abu Dhabi. In accordance with the guidelines, specified under Plan Capital 2030 towards securing the supply of middle income rental housing in Abu Dhabi, the UPC has introduced a policy which requires 20 percent of the residential gross floor area (GFA) in multi-unit residential buildings within developer led planned developments, to be developed and managed as middle income rental housing.
Stressing the urgent need for the implementation of the middle income rental housing policy, H.E Falah Al Ahbabi, general manager, Abu Dhabi Urban Planning Council, says: “At UPC we consider the provision of quality affordable housing to retain and attract skilled professional workers as an important social component in the long term strategic development of Abu Dhabi. It contributes towards the development of a well balanced urban environment that will enhance the lifestyle component in Abu Dhabi. We are confident that the comprehensive implementation of this policy will prove to be a significant milestone towards creating requisite affordable housing options for the residents of Abu Dhabi."
As indicated in the Real Estate Forecast Study recently unveiled by the UPC, the Abu Dhabi residential market is experiencing a shortage in the supply of residential units to meet the demands of the current population, particularly for the lower income brackets. This has resulted in a significant degree of sharing of housing units. The middle income rental policy is a step towards addressing the shortage of residential options in this category. The policy will apply to rental accommodations for middle income earners for whom the rental prices will be set at approximately 35 percent of the total annual household income.
Under the guidelines of this policy, the housing units will be rented out for a minimum period of ten years and it will be applied only to the GFA of multi-unit residential buildings and not to the component of a development that consists of single family structures (town homes and villas).
The directive would mandate the minimum floor areas for various accommodation options like studio, one bedroom, two bedrooms and three + bedrooms at 40, 50, 70 and 90 sq m respectively. The developer will determine the distribution of units within a development, which can either be distributed within buildings or located within a purpose built building. Middle income rental housing will be required to be provided in all stages of development or during the early stages of development.
Besides outlining the key guidelines of the policy, the UPC will continue to monitor the progress of all projects under the middle income housing policy through an annual progress report that will provide information about the middle income rental units that have been completed and rented to date. The progress information will be provided to the Abu Dhabi Municipality for assistance with implementation.
Mahmood Ebraheem Al Mahmood, chairman of Al Qudra Real Estate, talks to Cityscape magazine
How is Al Qudra working to incorporate the affordable housing policy?
“As one of the principal real estate developers based in Abu Dhabi Al Qudra is fully committed to fulfilling our role and responsibility in the delivery of middle income housing components in the future development and success story of Abu Dhabi Emirate.
“There is clearly a supply void in the middle income housing sector as revealed by studies undertaken by the UPC with respect to the Abu Dhabi real estate market.
“To address this market need, Al Qudra’s development plans for those projects in our portfolio that are qualified under the remit of the new policy, will be reviewed and reassessed for alignment with the development criteria as set out in the Middle Income Rental Housing Policy with immediate effect and going forward into the future.”
How will Al Qudra successfully create an affordable housing strategy, while maintaining a commercial entity?
As in all of Al Qudra’s projects past and into the future, our criteria will be to assess the projects from a feasibility standpoint with the view to achieving an optimum balance between the various components of the project, and to ensure that all design and implementation sustainability criteria are met and achieved.
How do you think this affordable housing policy will affect your business?
Positively – as the development and implementation of a sustainable middle income housing segment will build a critical mass of real market demand, foster confidence in the housing market, and drive economic fundamentals going forward. It will promote a beneficial demand/supply sentiment arising from a more balanced housing market.
What do you think about the 2030 Vision?
We view the Abu Dhabi Plan 2030 as a living structure plan that was first released in 2007. It sets out the road map for the structured future development of Abu Dhabi as a major world city. As with all long term plans, we anticipate that the plan will be reviewed at periodic intervals to ensure that the plan retains its relevance in alignment with the dynamism of the economic fundamentals of the nation going forward.
Abu Dhabi is faced with a rapidly increasing property inventory, coupled with declining prices. What’s in store for 2011/2012?
According to the UPC’s study of the real estate market for Abu Dhabi, the residential sector is currently undersupplied by some 48,400 units and is expected to remain undersupplied in till end 2013, when the undersupply number is estimated at some 26,300 units. In the medium term, it is anticipated that this undersupply condition will have a smoothing effect on the behaviour of pricing levels in the market. Real estate investments are generally long term in horizon, whereas short term price fluctuations are a part-and-parcel feature of the market. The market’s supply/ demand fundamentals are in favour of price stabilization at some point going forward, and the speed at which this will be achieved will depend on a host of other market factors in play such as availability of finance, legislative reforms particularly with respect to strata/escrow/mediation laws, transaction transparency reforms, and sustainable economic growth.
What impact will Resolution No. 64 2010, issued by the Abu Dhabi Executive Council (ADEC) have on regulating property registration rights in the emirate?
Resolution 64 is a timely piece of legislation for the Abu Dhabi real estate market that will pave the way in terms of a formal registration of real estate ownership, thereby making it easier to transact and transfer property ownership going forward. Property loan procurement will also be favourably impacted as a result. This will help boost market sentiments and confidence levels and is a plus in terms of taking a big step forward in the promotion of transaction transparency for all market stakeholders. We view this development as a big positive for the Abu Dhabi real estate market.