To rent or buy? With new property continuing to be released and rents continuing to fall, there’s never been a better time to raise that question. Abu Dhabi Week asks the experts

Despite a steady stream of new property nearing completion and rents slowly dropping in the capital, there’s been little real activity in the property market towards the end of 2010 and Q1 2011. As Q2 comes to an end, however, property experts are predicting plenty of movement for the rest of the year.

“Q1 2011 has continued on very much the same from the last quarter of 2010 in Abu Dhabi,” says Michael Michael, director of sales and leasing at Landmark Properties. “There’s been a stagnant pricing movement, with more still to come online from developments like Al Reef and Reem Island,” he explains. “I am not expecting anything to change over the next three months – I think the whole market is waiting for signals.

“However, I think this could change at the end of Q2 after the summer, provided that sufficient progress with handovers has occurred, also taking into consideration that summer is historically a quiet period.”

A recent report from Cluttons Middle East also backs up Michael’s opinion.

“2011 looks set to be an interesting year for the Abu Dhabi residential market,” the report adds. “The imminent release of units such as RAK Tower in Marina Square and apartments in Sun and Sky Towers will result in a spell of increased rental and sales activity, after two years of a stalemate in the market. This will likely cause a drop in average rental rates and the development of a two-tier market.

His advice for those looking to buy? “I would definitely say go for it if you can, but perhaps watch the market for the next three months first. By then a handover at Marina Square should have hopefully taken place and a clearer picture of the direction of the market will have emerged.”

There’s potentially relief on the market too for those looking to continue renting in Abu Dhabi, as more buildings become available, meeting the demand and increasing competition.

“Rents will remain stable in quality developments in good locations that are close to amenities or have quality amenities incorporated. Community developments are those that will continue to stand out to homebuyers and tenants,” says Rami Nasser, Aldar director of sales and commercial leasing.

According to Cluttons Middle East, rent prices have dropped in 2010, although marginally, and it’s definitely a pattern set to continue.

“Rentals at the lower end of the market have seen drops of around ten percent, whilst drops in more prestigious areas such as the northern area of Abu Dhabi island have been less severe, at around five percent. The villa sales market has also seen moderate falls of around two to five percent in developments such as Al Reef.

“For landlords to remain competitive they will need to be more creative in their offerings and consider breaking up
larger shell and core floor plates,” the report suggests.

Renting out property is certainly a trend that real estate company Better Homes has seen more of in the last year, and for the first quarter of 2011.

“More clients are leasing property at the moment,” says Loshini Lawrence, operations manager at Better Homes Est. “At least 80 percent of our leads are related to leasing at the moment.”

However, Lawrence believes that there are still plenty of challenges ahead with regard to lowering rents and ensuring both tenants and landlords get a fair deal.

“It’s all about awareness,” explains Lawrence. “I call it ‘reality pricing’ – by this I mean consulting with landlords and revising rent brackets and suggesting incentives for tenants, such as multiple cheques.

Michael agrees: “You’ll be hard pushed to find a landlord willing to agree to more than four cheques for rent payment as this pattern hasn’t quite followed through from Dubai. However, I do believe rents will become more affordable as supply increases and tenants are offered more choice; at the end of the day, landlords don’t want empty units.”

“As a landlord, you have to consider who is your consumer, what you are offering, and a price that meets consumer demands – and be able to expect and accept leverage,” adds Lawrence.

So what should those looking to rent or buy consider when first starting their property search?

Both Lawrence and Michael agree that research is crucial.

“Perhaps the most important thing to start with is research,” says Lawrence. “Decide on what areas you are interested in living in and why.

“Always speak to experts – those with real experience in Abu Dhabi,” adds Michael. “Do your homework. And don’t be afraid to ask lots of questions.”

If you’re looking to buy, there are a few more things to consider.

“You should consider the property’s purpose; are you going to live in it, or is it an investment,” Lawrence says.

You should also consider your finance options, make appointments with banks and research competitive interest rates.”
Lawrence also recommends that you know the product inside out. “Visit the property – more than once if needed – and get feedback on the development from as many different channels as needed.”

Charlie Kennedy

Case study: Buying in Abu Dhabi



Name: Stew Murphy
Nationality: Australian
Living: Al Bandar

Why did you move?
“I was living in a rented property in Muroor and was beginning to lose my sense of humour in paying so much of my salary on rent, effectively paying someone else’s mortgage off for them. I am really into Formula 1, so when Bandar came onto the market, I fell in love with the idea of being so close to all that action. I moved for the location; it was a lifestyle choice.”

What’s your experience been like?
“Ironically, contrary to all I’ve heard, the whole process was surprisingly easy – and getting a mortgage was easier than getting a car loan! The actual handover was a little complicated but I found it was a generally good experience.”

What advice would you give to anyone considering moving?
“My advice is that you’re silly not to buy if you can, especially if you’re here to stay in Abu Dhabi for some time. To own my own property for a couple of thousand dirham’s more a month than I spend on rent certainly makes financial sense to me. Even if I don’t sell at a profit, I’ve saved money on rent.”

Mortgage talk
Abu Dhabi Week gets some top finance tips from James Pearson, head of assets and liabilities at HSBC Bank Middle East.

• Consider the timescale to purchase the property; does this match the financier’s?
• Is the purchase price realistic?
• Which companies are offering financeto a particular project?
• What fees and deposits are to be paid by the purchaser, and are these realistic?
• Is there a requirement for documentaryevidence to be sent or verified from overseas?
• Is the property being purchased direct from a developer or is there a current owner, and does this person have existing finance on the property?
• Is the property under construction and who will be managing payments for construction costs? Are these to be paid direct to the developer or managed through the new ESCROW accounts?
• Make sure you understand the exact terms in which a customer is being offered finance. Feel free to ask questions - and to more than one advisor if needed
• If purchasing on the secondary market,can you access receipts from the seller for stage payment already made to the developer?
• Home buyers should also be aware that practices between developers, banks, finance companies and real estate agents do differ, so this should be taken into account when buying a new home

Cityscape 2011


Don’t miss out on the property event of the year, running from 17th to 20th April at the Abu Dhabi National Exhibition Centre. Cityscape 2011 offers a unique opportunity to gain an insight into over 500 developments, network with industry experts and expand your real estate portfolio. Information: www.cityscapeabudhabi.com