Buying
Property prices in Abu Dhabi have dropped by up to 25 per cent since peaking in the third quarter of last year, according to a paper published in the summer of 2009.
The ‘Abu Dhabi Real Estate Report’, launched by Landmark Advisory, shows prices in the capital are now approaching their original sales figures – down 15-25 per cent on fourth quarter 2008 rates. For properties due for delivery later than 2011, average prices are likely to fall by up to 10 per cent below the original sale cost quoted in the second quarter of 2009, the report added.
‘Freehold and leasehold prices spiked after Cityscape Abu Dhabi in May 2008 but, despite solid fundamentals, the market could not sustain such prices in the short to medium term,’ says Jesse Downs, head of research at Landmark Investors. Speculators saw Abu Dhabi as ‘the next big thing’ after Dubai, but by then the financial crisis had already hit the UAE, he added. ‘Launch prices were benchmarked against Dubai, so there was little room for appreciation even before liquidity dried up.’
Latest developments
The Cityscape Abu Dhabi show (www.cityscapeabu dhabi.ae) in summer 2009 saw the announcement of several major developments for the city, bringing some relief to contractors struggling against the construction slowdown.
The biggest of these is Capital City District, a 49 sq km low-rise development unveiled by the Abu Dhabi Urban Planning Council (UPC), with work set to begin in 2012. Once complete, it will serve as the government and economic centre of the UAE. The district, close to Abu Dhabi International Airport and Mohammed Bin Zayed City, will accommodate 370,000 residents, along with federal government buildings, universities, hospitals and embassies.
The project will also have a fully integrated transport system tying in to the rest of the transport network, including a high-speed rail service, metro railway and regional rail connections. UPC general manager Falah Al Ahbabi said the project presented ‘a once-in-a-lifetime opportunity to create a truly authentic and sustainable modern Arab capital.’
In terms of the other major projects in the capital, there was reassurance from the government-owned Tourism Development and Investment Company that all 12 of its key projects are progressing as planned, with none placed on hold. However, attendance figures at the show over the four days were reported to have been lower for 2009, due to the uncertain climate.
Renting
New arrivals are often confused by the vast disparities in rent prices, often within the same area. Reputable estate agents, such as LLJ Properties and Better Homes, broker well-maintained properties that fit the image most expats associate with a life in the oil-rich Middle East. Unfortunately, the reality for many is that they have to take what they can get.
Accepting that reality opens you up to the wealth of options advertised by private landlords in the daily classifieds. Be prepared for abruptness, downright rudeness, and the kind of cut-throat bartering you’d expect at the Iranian Souk. It’s also worth noting that the properties (usually split villas or elderly, decrepit apartments) often leave a lot to be desired.
Energy and a positive attitude are essential; we encountered one cheery soul who had seen close to 140 properties before he found a home in Khalifa City A. His advice? Refuse to pay the viewing fee (‘they’ll tell you “that’s just the way in Abu Dhabi” – it isn’t’); refuse to pay to be put on anybody’s books (‘they never call back’); and never accept the first price (‘with the amount of property coming onto the market, they’re often more desperate than you are’).
Know your rights
Walter Robinson, an associate lawyer at the Abu Dhabi office of law firm Al Tamimi (02 674 4535; www.tamimi.com), explains the legal ins and outs of renting and buying property in the capital.
What are the laws regarding shared villas? Am I likely to be thrown out?
There is nothing in the Landlord and Tenant Law to prevent the renting of part of a residential property. However, many people are falling foul by contravening the Municipal Laws that deal with the illegal partitioning of rooms, or construction of walls within villas without having first obtained the necessary building/municipal approval. It would therefore be advisable for a prospective tenant to establish whether the villa has been legally ‘split’. Usually the older properties ,which have been rented on this basis for some years, will be compliant.
If I have a dispute with my landlord, who can I go to?
The Landlord and Tenant Law of 2006 governs the landlord and tenant’s relationship within the emirate of Abu Dhabi. The Rental Disputes Committee has been established, which deals with all landlord/tenant-related issues. Other than seeking legal advice from lawyers within the emirate, an aggrieved tenant could approach the Rental Disputes Committee for assistance.
Is my rent ever likely to increase dramatically?
The prevailing rent cap decree for Abu Dhabi prescribes a maximum rental increase of five per cent of the aggregate rental paid for the previous year. We are unaware of any recent decree that amends this provision.
Can expats legally buy property in Abu Dhabi?
Non-UAE nationals are restricted in their ownership rights and cannot own a freehold title to land within the emirate of Abu Dhabi. Non- UAE nationals can acquire Usufruct [an ownership agreement for up to 99 years] or Musataha [a renewable agreement for up to 50 years] rights in respect of land situated within the Investment Zones, and Surface Rights to airspace in regard to apartments situated within the Investment Zones.
Are there different rules for family buyers to those wishing to buy to let?
There is no distinction between purchasers who purchase as an investment or those buying for residential purposes. The same rules apply with regard to property ownership within the emirate of Abu Dhabi.
With the property market in neighbouring Dubai in trouble, is it shrewd to buy in Abu Dhabi?
The authorities in Abu Dhabi have adopted a more measured approach to the development of real estate within the emirate and, while the property market has been unavoidably affected by the global credit crunch, the general feeling is that Abu Dhabi will weather the storm a little better then Dubai. Plus, because of the stage of the development cycle, Abu Dhabi is well placed to make necessary adjustments and to learn from the Dubai experience.
