Abu Dhabi employees in fix over losing Dubai life

Thu Sep 12, 2013 7:08am EDT
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By Stanley Carvalho and Praveen Menon

ABU DHABI/DUBAI (Reuters) - When American Stephen Perry lost his job at a bank in Dubai following the emirate's debt crisis in 2009, he was lucky to be hired by one of neighboring Abu Dhabi's government firms.

He didn't move house, so it didn't disrupt his wife's job or the kids' schooling, despite the daily 130-kilometre (80 mile) commute each way. That was still better than the nearly 200 kms he used to put up with in the United States, and he considered it a price worth paying to keep the liberal, cosmopolitan lifestyle in Dubai.

But now Perry is in a dilemma and might not be able to manage the commute after all.

Last September, Abu Dhabi, the capital of the United Arab Emirates, a federation of seven Gulf emirates, told state employees that if they lived outside its city limits they would not be eligible for housing allowance, which accounts for about a third of their salaries.

The government has said the new rule was aimed at cutting traffic and road accidents, a nod to the risk of commuting on the busy desert highway between Abu Dhabi and Dubai.

But analysts and industry experts say the policy is designed to help absorb a glut of new high-end homes in Abu Dhabi and revive state developers such as bailed-out Aldar.

"Many new units have come up in Abu Dhabi, reaching the peak of its development cycle. The move is to create new demand and make sure the vacancy rates don't reach high levels," said Matthew Green, research head at property consultancy CBRE in Dubai.

The Abu Dhabi government declined to comment on the rulings implications for the property market.   Continued...