When looking back over 2013 in the property industry, it is interesting to note the various ups and downs of the property market in the capital
The year started with a shock announcement from the central bank that for property purchases the minimum down payment would be substantially increased – at up to 40 percent for non-locals.
This was done without conferring with the other banks or lenders and after an outcry from the interested parties it was announced that it was an idea only for consultation.
It was assumed that this would put the brakes on rising property prices but after the announcement was absorbed, prices have continued to rise, partly because many purchases are made with cash.
In the four areas that expats are permitted to buy – Saadiyat Island; Al Raha Beach; Al Reef and Al Reem – increases in excess of 25 percent have been noted.
This also brought to an end the popular “buy to own” schemes whereby the first three years of rent could be used as a deposit for a purchase.
One of the underlying factors that has influenced rents in Abu Dhabi over the last year has been the government decree that “if you work in Abu Dhabi then you have to live in Abu Dhabi”.
This announcement was originally made in April 2012 to be implemented by September 2013. It was largely ignored and many people assumed there would be an extension after September.
The sensible people moved as their leases came to an end in Dubai or elsewhere, unfortunately the majority did not until they went to their housing officers and were told that they would not get the housing allowance.
Whilst rental prices had been rising steadily from the beginning of the year the sudden rush of applicants at the end of June resulted in a massive hike in rents and the busiest Ramadan anyone could remember.
Many landlords faced with a tenant who needed to sign that day in order to get the housing allowance took full advantage of the situation and rental increases of 20 percent or more were not uncommon.
Studios and one-bedroom apartments which were legal also suddenly disappeared from the market as tenants who had property elsewhere and wanted to still live in it and not move took an apartment with an Abu Dhabi address.
Whether this will be allowed this year remains to be seen and could well see the situation reversed come September this year.
For people renting in Abu Dhabi the biggest shock was most probably the announcement that the five percent rent cap was to be removed in November.
In theory this means that landlords are now free to raise a rent by any amount that they decide. But so far, most companies and landlords have been sensible and are increasing rents by between 5 percent and 10 percent although we have seen isolated cases where individual landlords are asking for increases in excess of 50 percent.
It needs to be said that tenants need to be aware of current rental values in the villas and apartments in which they are living as landlords do also have a case where a tenant is paying say 30 percent or more less than current values.
Cluttons, as one of the few real estate brokers in Abu Dhabi with a residential valuation department staffed by professionals, is able to assist both landlords and tenants to arrive at an equitable solution should they not be able to resolve matters between themselves.
There would of course be a charge for this but it could be money well spent for both parties.
At two new Aldar developments, The Gate and Al Rayyana, it is possible to pay a 5 percent fee and they will guarantee the rent for the next three years. This is an interesting development that may well be copied by other developers.
There is at present no official appeals procedure, as in Dubai, but it is possible that there may be an announcement in due course.
One of the continuing problems in Abu Dhabi is the lack of suitable properties that appeal particularly to expats. Whilst on paper there is sufficient housing, in reality people wish to live at a certain standard and in certain places, so by definition the most popular areas will show the biggest increase in prices.
Recently released developments which should help to redress the balance include The Gate, Oceanscape and Mangrove Place at Al Reem, Amwaj at Al Raha Beach, Al Rayyana at Khalifa City and at the new Al Rawda area which is near Carrafour at Airport Road. These new communities will have a number of individual buildings with one, two and three-bedroom apartments.
Soon to be released include Capital House in the new Capital Gate area near Adnec, which will consist entirely of one and two-bedroom apartments.
There are no major villa developments due for release in 2014 although there are a number of smaller developments, particularly in Khalifa City A.
The answer, as always, when acquiring a property either for rent or purchase or requesting up-to-date information, is to consult a professional and proficient real estate company.
No doubt there will be new surprises in 2014 but we hopefully will be able to look back in 2015 on another eventful year.
