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Cost of living in Abu Dhabi to rise

by Jumana Abdel-Razzaq on Jan 9, 2017

Abu Dhabi, UAE.
Abu Dhabi, UAE.

Following the announcement of a 3% municipality housing charge set to be implemented this month, Abu Dhabi residents are preparing for a rising cost of living due to hikes in water and electricity tariffs.

Analysts say that the fee, set to be implemented by Abu Dhabi Municipality on tenants’ annual rent, is likely to push down consumer spending in Abu Dhabi, according to a report by Gulf News.

Though the housing charge became law last year, it will come into effect this month for expatriate renters, but will not affect homeowners in the emirate.

Matt Green, head of research and consulting at CBRE Middle East said: “This [the municipality fee] will have an impact on people’s spending levels, and for some, it just might be the thing that sets them over the edge in considering whether they can actually afford to be here or not. It’s only 3% of your rent, but it will certainly get people’s back up.

“We have a similar system [municipal fee] in Dubai, and I don’t think it’s off-putting for the market … so I’m not sure if it’s sufficient to have a particularly negative impact on the property market.”

Experts have said that the fee is a necessity for the government to increase and diversify its revenue sources amid low oil prices.

Earlier reports said that Abu Dhabi Water and Electricity Authority (Adwea) will be collecting the fee as a backdated lump sum from February 2016, which may cause added stress for renters in the emirate.

“Fees accumulated since the Resolution had been taken are being added to Abu Dhabi Water and Electricity Authority (Adwea) bills as a lump sum,” said a statement released by the municipality on Thursday.

“Applicable fees in the future shall be added to Adwea monthly bills starting from January 2017.”

A spokesperson said last week that the charge will help pay for municipal services such as street cleaning and landscaping, among others, and will apply to the whole of the emirate of Abu Dhabi, including Al Ain and the Western Region.