The Abu Dhabi real estate sector was something of Dr Jekyll and Mr Hyde last year. Sales prices have been flat since the last quarter of 2014, but leasing failed to read the script and was up by as much as 7 per cent in some areas last year, according to JLL – although that is still much reduced from the pace in 2013 and 2014. What has caused this divergence, and what will sales and leasing do this year?
On the supply side
When it comes to new units coming on to the Abu Dhabi market, the property pipeline is looking bare. Many new projects are planned, such as Mamsha on Saadiyat Island from Tourism Development and Investment Company; Ansam, Mayan and West Yas on Yas Island from Aldar; and Al Hadeel on Raha Beach, also from Aldar. These are just a few examples – but these projects will not come online until at least next year. Abu Dhabi’s large developers were badly stung by the 2008 crash and have lain dormant almost ever since, with only the serious rental spikes in 2014 prodding them out of their slumber and back to the construction site. High-rise buildings have a lead time of up to four years, so the delay in restarting stalled projects or launching new ones has long-term effects. Most third-quarter 2015 reports are saying that only 2 to 3 per cent will be added to the total housing stock per year over the next two to three years.
Demand stays strong
Demand for units in Abu Dhabi, at least on the leasing side, has remained strong, as according to most reports rents went up by 5 to 7 per cent last year. This rise was mostly because of the low supply coupled with an increasing population. Population predictions in such a fluid, immigrant-based economy are hard to come by, but according to the Statistics Centre Abu Dhabi, the average annual population growth rate between 2005 and 2014 was 7.6 per cent. If this holds, then population will continue to outstrip housing supply and rents will continue to rise – simply put, demand is greater than supply.
The oil effect
But what of the oil price slump? Will this affect population statistics? According to Monster.com, it seems it has not yet. Companies are still hiring even in the middle of what would seem like reduced sentiment in the region. Abu Dhabi’s population is closely linked to government spending and jobs, so people will be looking closely at the emirate’s budget for this year. The federal budget was cut by a modest 1.1 per cent for the coming year, and Dubai’s budget was increased by a whopping 12 per cent. The IMF said it expects the UAE economy to grow by 3 per cent this year, so outlook is reasonably positive. Rents should increase at an inflation level of 4 to 5 per cent this year.
Outlook for sales
It seems that people are holding their breath waiting to see what will happen in a new “lower for longer” era of oil prices, and how the Abu Dhabi government will respond. Continued increases in rental prices should signal rises in sale transactions, but the two have temporarily decoupled over the uncertainty. This has led to yields on investment property getting bigger and some rich pickings for more confident investors. A positive budget and continued rent increases would snap the uncertainty in the back end this year, and a flood of investors could return to take advantage of high yields, with end users buying to control rents.
Interest rates
The fly in the ointment for sale prices may be interest rates. The US Federal Reserve is expected to raise rates by a further 0.5 per cent through this year (and the UAE is likely to follow because of the dirham-dollar peg). Couple that with lower liquidity in the UAE banking system as the government withdraws money, and borrowing will get more expensive. Expensive borrowing makes buying harder for end users and less profitable for investors using leverage.
The property market will generally hinge on population statistics. If people keep arriving, then rents will rise and returns will start looking too good to ignore; buyers will come back to the market in droves to take advantage of yields and cost savings. However, if Abu Dhabi’s government spending falls and it lays people off outside the oil and construction sectors, which have taken the brunt of the reductions, then the population might stagnate. If that happens, there will be bloated housing inventories and sale prices and rents will start to fall.
Ben Crompton is the managing director of Crompton Partners Estate Agents.
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A MINECRAFT MOVIE
Director: Jared Hess
Starring: Jack Black, Jennifer Coolidge, Jason Momoa
Rating: 3/5
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
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RESULT
Leeds United 1 Manchester City 1
Leeds: Rodrigo (59')
Man City: Sterling (17')
Man of the Match: Rodrigo Moreno (Leeds)
THE SPECS
Engine: 6.75-litre twin-turbocharged V12 petrol engine
Power: 420kW
Torque: 780Nm
Transmission: 8-speed automatic
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Company Profile
Company name: NutriCal
Started: 2019
Founder: Soniya Ashar
Based: Dubai
Industry: Food Technology
Initial investment: Self-funded undisclosed amount
Future plan: Looking to raise fresh capital and expand in Saudi Arabia
Total Clients: Over 50
How to help
Call the hotline on 0502955999 or send "thenational" to the following numbers:
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Tax authority targets shisha levy evasion
The Federal Tax Authority will track shisha imports with electronic markers to protect customers and ensure levies have been paid.
Khalid Ali Al Bustani, director of the tax authority, on Sunday said the move is to "prevent tax evasion and support the authority’s tax collection efforts".
The scheme’s first phase, which came into effect on 1st January, 2019, covers all types of imported and domestically produced and distributed cigarettes. As of May 1, importing any type of cigarettes without the digital marks will be prohibited.
He said the latest phase will see imported and locally produced shisha tobacco tracked by the final quarter of this year.
"The FTA also maintains ongoing communication with concerned companies, to help them adapt their systems to meet our requirements and coordinate between all parties involved," he said.
As with cigarettes, shisha was hit with a 100 per cent tax in October 2017, though manufacturers and cafes absorbed some of the costs to prevent prices doubling.
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The specs
Engine: Four electric motors, one at each wheel
Power: 579hp
Torque: 859Nm
Transmission: Single-speed automatic
Price: From Dh825,900
On sale: Now
Ms Yang's top tips for parents new to the UAE
- Join parent networks
- Look beyond school fees
- Keep an open mind
if you go
Getting there
Etihad (Etihad.com), Emirates (emirates.com) and Air France (www.airfrance.com) fly to Paris’ Charles de Gaulle Airport, from Abu Dhabi and Dubai respectively. Return flights cost from around Dh3,785. It takes about 40 minutes to get from Paris to Compiègne by train, with return tickets costing €19. The Glade of the Armistice is 6.6km east of the railway station.
Staying there
On a handsome, tree-lined street near the Chateau’s park, La Parenthèse du Rond Royal (laparenthesedurondroyal.com) offers spacious b&b accommodation with thoughtful design touches. Lots of natural woods, old fashioned travelling trunks as decoration and multi-nozzle showers are part of the look, while there are free bikes for those who want to cycle to the glade. Prices start at €120 a night.
More information: musee-armistice-14-18.fr ; compiegne-tourisme.fr; uk.france.fr
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Specs
Engine: Dual-motor all-wheel-drive electric
Range: Up to 610km
Power: 905hp
Torque: 985Nm
Price: From Dh439,000
Available: Now
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Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
