While rents are on the increase in select areas there is still a strong case for many tenants to resist an increase.
While rents are on the increase in select areas there is still a strong case for many tenants to resist an increase.

Business

Abu Dhabi is a tenants' market for those willing to negotiate

The Life: Being a tenant in Abu Dhabi can be a daunting prospect but it is not a foregone conclusion that rents only go up, Mario Volpi advises tenants to stand their ground and negotiate.

Mario Volpi

August 29, 2013

I rent an apartment in Abu Dhabi and am nearing the end of my first year. I know the rental situation is a little crazy and am worried about how much my landlord will put it up by. What systems are in place in Abu Dhabi to ensure my rent rise is within a sensible range?

JB, Abu Dhabi

Being a tenant in Abu Dhabi can be a daunting prospect as there are

in the emirate. Where there is a case for a genuine increase, the norm is 5 per cent upon renewal.

It is not a foregone conclusion that rents only go up - certainly this appears to be the case in Dubai at present, but not in many areas in Abu Dhabi. The capital has mirrored the property ups and downs of Dubai and continues to do so, albeit 18 to 24 months behind its neighbour.

It is always advisable to have as good a relationship as possible with your landlord, you are, after all, effectively looking after his property by living in it. Landlords can sometimes make misjudged decisions about rental values, so the key to communication is the facts.

My advice to any tenant is to arm yourself with current property information. Do your homework and have a clear understanding of the market. If after all this the landlord still wishes to increase the rent to a level you do not agree with, then it is time to look elsewhere for your next home.

The Abu Dhabi property landscape is ever changing and more properties are coming onto the market so there is a greater choice for tenants whatever their priority - price, accommodation or location.

Right now, Abu Dhabi is by and large a tenants' market. Good deals are out there to be had.

Negotiate, negotiate, negotiate should be your mantra. You will get your way - the only exception may be in Al Reef, where prices appear to be on the increase. This is mainly due to facilities, shops and communities being built up and offering a desirable lifestyle.

Yas Island is also expanding as more communities spring up and with them come malls, restaurants, facilities and hotels.

For cheaper rents, look to downtown Abu Dhabi island, where good deals are readily available. The only downside is that parking is limited.

Reem Island has plenty of inventory with many towers coming onto the market. This is likely to suppress rental prices in the short to medium terms at this location.

Mario Volpi is the managing director of Prestige Real Estate in Dubai and has worked in the property industry in London and Dubai for the past 29 years. Send any questions to mario@prestigedubai.co

West Asia Premiership

Dubai Hurricanes 58-10 Dubai Knights Eagles

Dubai Tigers 5-39 Bahrain

Jebel Ali Dragons 16-56 Abu Dhabi Harlequins

Killing of Qassem Suleimani
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.

Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.

“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.

Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.

“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.

Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.

From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.

Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.

BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.

Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.

Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.

“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.

Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.

“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.

“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”

The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”

Tailors and retailers miss out on back-to-school rush

Tailors and retailers across the city said it was an ominous start to what is usually a busy season for sales.
With many parents opting to continue home learning for their children, the usual rush to buy school uniforms was muted this year.
“So far we have taken about 70 to 80 orders for items like shirts and trousers,” said Vikram Attrai, manager at Stallion Bespoke Tailors in Dubai.
“Last year in the same period we had about 200 orders and lots of demand.
“We custom fit uniform pieces and use materials such as cotton, wool and cashmere.
“Depending on size, a white shirt with logo is priced at about Dh100 to Dh150 and shorts, trousers, skirts and dresses cost between Dh150 to Dh250 a piece.”

A spokesman for Threads, a uniform shop based in Times Square Centre Dubai, said customer footfall had slowed down dramatically over the past few months.

“Now parents have the option to keep children doing online learning they don’t need uniforms so it has quietened down.”

Fourth Arab Economic and Social Development Summit

As he spoke, Mr Aboul Gheit repeatedly referred to the need to tackle issues affecting the welfare of people across the region both in terms of preventing conflict and in pushing development.
Lebanon is scheduled to host the fourth Arab Economic and Social Development Summit in January that will see regional leaders gather to tackle the challenges facing the Middle East. The last such summit was held in 2013. Assistant Secretary-General Hossam Zaki told The National that the Beirut Summit “will be an opportunity for Arab leaders to discuss solely economic and social issues, the conference will not focus on political concerns such as Palestine, Syria or Libya". He added that its slogan will be “the individual is at the heart of development”, adding that it will focus on all elements of human capital.

Friday's schedule at the Etihad Airways Abu Dhabi Grand Prix

GP3 qualifying, 10:15am

Formula 2, practice 11:30am

Formula 1, first practice, 1pm

GP3 qualifying session, 3.10pm

Formula 1 second practice, 5pm

Formula 2 qualifying, 7pm

At a glance

Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.

 

Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year

 

Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month

 

Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30 

 

Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse

 

Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth

 

Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances