U.A.E.: Skilled Expats Hit by Rising Inflation


Skilled expats hit by inflation

ABU DHABI - JUL 20: Skilled expatriates at the heart of the nation’s economy are turning their backs on the capital as the “chaotic” rental market and skyrocketing inflation make the UAE progressively less attractive and force companies to take increasingly costly steps to house essential workers.

In a further confirmation of forecasts that rent inflation will have an impact on key industries, recruiters say they are struggling to fill mid-level jobs and big employers, such as Etihad Airways, are taking their own steps to secure housing and deal with the crisis.

The bare numbers show the situation to be a daunting one: rents for quality apartments in the capital increased by an average of 49 per cent in the past year, according to figures released yesterday by the property services company Asteco; in some areas they have almost doubled.

Vacancy rates, meanwhile, have reached less than five per cent in many areas of the city and Abu Dhabi Chamber of Commerce and Industry estimates that there are 8,000 too few homes available in the capital to meet demand and this figure is expected to rise to 20,000 by the end of the year.

“This is a problem being experienced by a lot of organisations in Abu Dhabi,” said Peter Carrie-Wilson, the executive vice president of human resources for Etihad, one of the largest employers of expatriates in Abu Dhabi.

“Traditionally, there has been an expectation that if you move to the UAE you will get a big four-bedroom villa – that’s not the case and it’s a matter of managing expectations.”

A report in May by the research unit of the Department of Planning and Economy found low and middle-income workers, who make up 85 per cent of the population, had been the hardest hit by the rising cost of living.

The report estimated that middle-income earners were spending an average of 45 per cent of their income on housing.

It warned that if soaring rents were allowed to continue, a “genuine crisis” would develop that could affect many different sectors.

Meanwhile, the Government’s efforts to limit the rise in housing costs by imposing a cap on rents have been largely ineffective, say agents and tenants.

This is because the restriction applies only to renewed contracts, but has no effect on new tenancies.

Landlords can charge what they can get away with when drawing up agreements for new tenants, including those arriving from overseas.

The Government has also worked to push through new property development. Close to 93,000 square metres of land at Khalifa City B has been allocated to the developer Al Rayan for a village for thousands of low and middle-income workers. The land was donated last December by Sheikh Mohammed bin Zayed, Crown Prince of Abu Dhabi, but this development and other large-scale housing projects will not be completed for several years.

With economies around the world slowing, the UAE has been able to attract high-quality talent thanks to its buoyant economy. However, said Christine Bond, the managing director of ABC Recruitment, many prospective staff were travelling to the city but changing their minds after arriving to discover the high cost of accommodation.

“Employers are pulling out their hair with frustration because although we can recruit people, they can’t find anywhere to live at a price they can afford,” she said. “It’s a totally chaotic situation.”

Mr Carrie-Wilson said that although Etihad, which employs more than 5,500 staff from 150 countries, was an “attractive proposition” as an employer, the shortage of affordable accommodation in Abu Dhabi had led it to take more aggressive steps to ensure staff were housed.

It recently increased its accommodation allowance significantly “in line with rental inflation” and this week would launch an in-house property management department dedicated to finding housing for its staff. It also operated a rent-to-buy scheme and was developing a new village to house 5,500 staff.

Although such initiatives were costly, said Mr Carrie-Wilson, companies could not afford to ignore the situation. “Globally, there’s a shortage of good talent and it’s important to be one step ahead. When you look at what’s happening in the global economy, it’s in an organisation’s interest to build now because the costs in one year’s time, or five years’ time, will have tripled.”

Jojo Kusbodio, a human resources administrator for the Orion Group, which is recruiting thousands of staff for the development company Aldar Properties, said many middle-income candidates were not interested in moving to Abu Dhabi unless they were offered accommodation.

The company provides accommodation for all of its staff. Next year, the Aldar hotel and hospitality division is to open a compound close to the airport that will house about 30,000 employees at all levels.

Paul Preston, the Abu Dhabi sales manager at Sherwoods Independent Property Consultants, said developers of many large projects were selling them directly to companies for staff housing. “If a developer has a project to launch, they’ll ring a big company who’ll buy them out before the building even hits the market.”

A consultant who moved recently to Abu Dhabi from Britain said he had abandoned the plan at first when he discovered the cost of accommodation. He changed his mind only when his company offered to put him up in an apartment until he could find his own place, but this had not worked out.

“Looking around at rental prices, I’ve now stopped looking for myself as I just can’t afford anywhere,” he said.

“As a result, I am not entirely sure of my future here and may return home to the UK if things aren’t resolved in the coming few months.”

Online expatriate forums used by prospective employees are dominated by housing concerns.

“The rents in Abu Dhabi are very high,” wrote one woman on a British forum last week. “Also, there is very little available. We have a friend staying with us until he can find a place to live. He started work about two months ago. He can’t find anything within his budget of Dh190,000 [US$51,700].”

She strongly advised anyone considering moving to Abu Dhabi to “secure accommodation before moving out here. You will not be able to find a place to live. It is at a crisis point.”

Island fire burns workers’ homes

A fire on Lulu island, witnesses said they saw think smoke and saw an explosion. The fire was located on the side of Lulu Island closest to the port area, and was reported to be situated inside a workers camp.

ABU DHABI - JUL 08: An explosion and fire on Lulu Island, off the coast of Abu Dhabi, has destroyed 16 wooden homes inhabited by hundreds of construction workers.

People were evacuated from the buildings as 15 firefighting vehicles were brought in by boat from the Abu Dhabi mainland.

The fire started at about 2pm on Friday on the Port Zayed side of the island and took an hour to contain.

Firemen suspect the blaze was caused by flames from cooking equipment inside one of the units. An investigation has been launched. “We think they were cooking food and did not use the correct safety measures,” said a spokesman for Abu Dhabi Civil Defence.

A witness, who was shopping near Port Zayed, said he was watching smoke billowing from the island when a fireball shot into the sky. “I didn’t hear an explosion, but I saw a big ball of flames,” he said. “It must have been several kilometres away, but it still looked huge. It looked like the sort of fire you get from burning fuel or a gas cylinder.”

Another witness said he saw fire engines to be transported to the island gathering on the Corniche.

In the future, he said Abu Dhabi Civil Defence should use speedboats equipped with firefighting apparatus. “These boats go at about 70mph on the water and could be there in about two minutes,” he said. “If something happens on islands like Yas and Reem, where so much construction is taking place, there’s currently no quick transport for emergency services.”

The crossing currently takes about 10 minutes.

Lulu Island lies opposite the Corniche and is accessible only by boat from the breakwater near Heritage Village. The island consists mostly of dunes and beaches, protected by a breakwater. But it will become home to between 18,000 and 22,000 residents in a construction project that will feature a monorail, a single iconic tower and canals lined with shops.

Sorouh Real Estate, the developer, unveiled a model of the project at the Cityscape Abu Dhabi exhibition. It showed that the island would be a leisure destination featuring several public parks and beach resorts.

Only about 20 per cent of the island will be for retail and commercial use, mostly concentrated on the side facing Abu Dhabi. There will be three main entry points to the 570-hectare island: a tunnel connecting it to the Corniche, a monorail from downtown Abu Dhabi that will travel to key points on the island and a bridge for traffic. Visitors will also still be able to travel there by boat.

Court expected to summon beach couple

Police records show they face three charges – illicit relations, public indecency and being intoxicated in a public place.

DUBAI - JUL 08: A British couple, allegedly caught having intercourse on a public beach, are to be summoned today to the Dubai Public Prosecution’s office, according to a source familiar with the case.

Michelle Palmer, 36, and Vincent Acors, 34, were expected to appear at the preliminary investigation, along with four witnesses, including the arresting police officers.

“The case was referred to the Dubai Public Prosecution on Wednesday and already has a registered case number,” said the source. “On Sunday, the public prosecution will evaluate the case and the charges made by the police, whether to increase or reduce the charges.”

The pair were arrested on July 5. Police records show they face three charges – illicit relations, public indecency and being intoxicated in a public place, said the source.

British media reports claimed Ms Palmer had assaulted a police officer but no assault charges are listed.

Both have denied they had intercourse on the beach.


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