The UAE capital's housing woes are expected to ease in three to four years as projects are completed to supply new housing units, a top Abu Dhabi government official said.

'Supply shortage is a fact and an issue for the past two years. The shortage will continue for at least 3-4 years,' said Falah Al-Ahbabi, general manager of Abu Dhabi's Urban Planning Council (UPC), without giving figures or a time-frame for production of new housing units.

A report by Abu Dhabi's chamber of commerce earlier this week said a shortage of at least 28,000 housing units this year was pushing up rents and helping stoke inflation, and that  total demand for units would rise to 70,000 by 2010.

Ahbabi told Reuters that the UPC and Abu Dhabi's Executive Council, the emirate's highest decision-making body, were drawing up a plan to address the issue of soaring rents and create more affordable housing, he said without going into details.

He said he supported lowering the emirate's rent cap to 1 per cent a year from the current 5 per cent. 'Rents are market driven and we support a free market to some extent,' he said.

Inflation in Abu Dhabi hit 12.9 per cent in the second quarter, up from 11.5 per cent in the first quarter according to preliminary data provided by the Abu Dhabi Planning Department last month. The body later retracted the data and said it was working on a new consumer price index.

Ahbabi said the real estate sector in the UAE and the region had been spared by the current global crisis.

'There is a global crisis impacting the real estate sector everywhere. Until now, the UAE and the region have not been impacted. There is huge demand here,' he said.

Abu Dhabi's population is currently more than 1 million and growing at 7 per cent a year, Ahbabi said.-Reuters