Everything you need to know about renting in Abu Dhabi

How much should you be paying? Discuss this article

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The cost of renting in Abu Dhabi is always a hot topic on every resident’s mind, especially if their lease is coming up for renewal. It’s been 12 months since we last explored the subject and September is always a good time to delve into it, since it’s when we tend to see a lot of movement in the market following the return of residents after the summer and new arrivals moving to the city.

With a large majority of residents renting rather than owning their homes, the ebb and flow of property prices is keenly observed not only by industry insiders but also by home-hunters looking to get the best value for their dirham next time they move.

Whether you are deciding whether to extend your lease at your current abode or seek a better deal elsewhere; you are taking your first steps on the property ladder in the capital; or are pondering whether it might be time to buy your own place, there are a lot of weighty issues to consider.

Abu Dhabi’s rental market is a hive of activity at the moment. As well as new developements being completed, residents are shifting around town and taking up new tenancies. And there are some bargains popping up across the board – from studio apartments through to spacious villas, there are good savings to be made.

What’s happening in the market?
Craig Plumb, head of research (MENA) for Jones Lang LaSalle (JLL), a leading real estate and investment management firm with an office in Abu Dhabi as part of its global network, pinpoints living costs, cuts in some
sectors’ housing allowances, along with potential uncertainty in the jobs market for the current climate.

Plumb says financial pressure has led some residents to downsize, with higher vacancy levels putting pressure on landlords to slash asking prices.

Plumb explains: “The combination of increased living costs, some cuts in housing allowances and less certainty in the job market have led some residents to downsize to smaller and cheaper units. Vacancy rates will therefore continue to place downward pressure on residential units.”

According to JLL statistics, apartment rents have declined by ten percent over the last 12 months, with sale prices also falling, albeit at a slower rate of three percent.

Propertyfinder, the largest real estate website in the UAE, also cites oil prices and the employment sector and demand for housing as key factors in the rent reductions.

The Propertyfinder Trends 2017 report states: “Abu Dhabi’s most popular communities including Al Reef, Al Reem Island, Al Ghadeer and the Corniche all saw decreases in annual rent. Al Raha Beach remained flat while Saadiyat Island saw a 3.9 percent increase. Apartments in Saadiyat are Abu Dhabi’s most expensive, asking Dhs106 per square foot per annum.”

Alan Kaye, director of business development at District Real Estate, agrees that the effects are being being felt across the market. He adds: “The effects of the reduction in the oil price and amount of people still working in the industry are still being felt. Prices are in general 15 to 20 percent lower than say eighteen months ago.”

Power shift
Property expert Kaye says that the current financial climate has made a “marked difference” for tenants in their dealings with landlords. He continues: “Many have introduced promotions such as a free month or no commission, and generally landlords, want to get properties leased and are much more willing to listen to offers.”

Kaye says that while property prices are now starting to settle down, they will continue to fall in certain sections of the city.

He adds: “Prices are generally beginning to plateau but in some parts of the city which are either less popular or where there is an oversupply then I think that they still have further to fall.
“By using a good real estate company you will always ensure that you obtain the best rental price.”

Supply and demand
The good news for tenants is that, coupled with more affordable options, developers have not been put off from pressing ahead with new housing projects. By the end of this year, Plumb says, around 4,000 new residential units are expected to be on the market – many in the hot spot of Al Reem Island and the Corniche - with another 13,000 set to be delivered by the end of 2019, taking the amount of stock available in the city to close to 260,000. The flood of new developments will ensure tenants have plenty of options as they plan their next move.

Do your homework
With the balance of power shifting back towards tenants, it is vital to do some research yourself to ensure you are making the most of the good deals available.

Kaye says: “Once a tenant has identified where they would like to move they should do some homework and check out current prices. They should then make a sensible offer based on this knowledge.

“Landlords are now accepting multiple cheques for annual rent – three ,four, or in some cases, up to twelve have been negotiated by our company recently.”

But while paying for your rent in multiple cheques, is becoming increasingly commonplace in Abu Dhabi, Kaye does not believe the historic one-cheque culture is coming to an end quite yet.

He adds: “Many properties are still being leased by companies and in these cases they generally pay with one cheque. Landlords are of course aware of this and particularly in the high end areas of Abu Dhabi, one or two cheques is still the norm.

“In areas where company lets are less likely to happen then offering one payment can often be a strong negotiating tool in further reducing a price.”

Should I stay or should I go?
There is a lot to consider when lease renewal comes up. Should you stick with what you know (avoiding the hassle of uprooting possessions and having to set up utilities as well as TV and internet subscriptions again) or make the move if the grass really does look greener somewhere else?

Kaye says tenants should be aware of some landlords hiking rents and be prepared to weigh up all of their options.

He says: “Some landlords may still be looking to increase a rent particularly if the property is leased to a company and they are hoping to simply “get away with it”.

“If you are looking to renew a tenancy then you should check out the current prices and then be realistic with your negotiations based on this information.

“Remember in Abu Dhabi you will need to make contact with your landlord a minimum 60 days before the lease ends otherwise the terms of your current lease continue.

You should not wait for the landlord to contact you but contact him or the managing company, say 70 days before with your proposal for the new lease term.”

Hot prospects
The property market looks set to heat up in the coming months, with island living in the capital set to be particularly tempting.

Kaye says the future looks exciting for people looking to move to Abu Dhabi’s glitzy entertainment destination, Yas Island.

Kaye says: “Yas Island in particular is very exciting with both Mayan and Ansam [residential developments being driven forward by Aldar Properties] ,consisting of one, two and three bedroom apartments and West Yas which will be the first major villa development in Abu Dhabi for a number of years. All are due for handover in the next six to twelve months.

“Aldar, the developer, is also about to launch a new project on Yas [Water’s Edge]with its own promenade and canal which is off plan and due for completion in 2020.

“Other new developments coming on stream in the next few months include Hidd al Saadiyat on Saadiyat Island,which is a community of four, five and six bedroom villas, at Raha Beach, The Crescent, which are one and two bedroom apartments, and Hadeel which will be one, two and three bedroom apartments. On Reem Island they are building both the Leaf Tower and Sigma Tower, too.”

Time to buy?
To buy or not to buy, that is the question. While the vast majority of residents in the city decide to rent, the lure of owning your own property only grows as prices continue fall.

Ben Crompton, managing partner at Crompton Partners Estate Agents, says there a number of advantages in laying down more permanent roots in the city.

Crompton says one of the big benefits of buying your own property is the option (one which is very rarely offered when renting) is to make monthly payments – which will usually be cheaper than the sums you are handing over to your landlord.

Crompton says: “You can pay monthly as opposed to one or two cheques per year. Your monthly repayments to the bank will usually be lower than any rent you pay, so it can be cheaper. Rent in Abu Dhabi is paid per year and you usually have to pay in one to three cheques. This is quite a big upfront cost.”

While you will never see the money you spend on rent again, investing in your own home gives you the money to claw back some of your cash when or if you come to sell your home. Crompton adds: “In the first year, roughly one third of your repayments go to paying off the loan principal, so you get that money back when you sell.”

Crompton adds, however, that there are extra costs to consider if you are thinking about making a purchase, such as transfer and broker fees.

As well as financial matters, being a home-owner gives you greater freedom and control. Crompton says: “You are your own landlord so you don’t need to put down deposits, argue over maintenance and you have more influence with building management.”

Another plus, Crompton says, is the opportunity to rent out your home if your circumstances change quickly.

He adds: “If you do move back home you can end up having to pay the rest of the years’ rent even if you aren’t in the property. If you own, when you move back you can rent it out.”

The information in this feature is provided for information purposes only. The information is not intended to be, and does not consitute financial advice, is general in nature and not specific to you. Before making financial decisions, you should seek the advice of a number of experts and undertake your own due dilligence. You are responsible for your own research and financial decisions.

By Chris Maxwell
Time Out Abu Dhabi,

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