'Buy to stay' best way for Abu Dhabi tenants

A number of renters in Abu Dhabi are becoming owner-occupiers - buying to stay - as rents are creeping up in the emirate, according to a senior official at Aldar Properties.

“A number of policies have been implemented and that has helped the market. We have seen people move to Abu Dhabi to rent here. But what we are now seeing is that these people are becoming owner-occupiers as rents are creeping up,” Gurjit Singh, Chief Development Officer of Aldar Properties, told Emirates 24|7.

“A lot of the renters are beginning to realise it may be better to put rent allocations as equity into completed real estate. Hence, we are seeing a healthy take up of our existing stock.”

A deadline for September 2013 was set for Abu Dhabi government employees to move to the emirate if they wanted to claim housing allowance. The Executive Council’s decision was aimed to ensure the safety of employees commuting long distances.

Over 100 people had purchased properties in the last six weeks alone in The Gate in Shams Abu Dhabi, Singh said, adding, “it reflects a strong trend towards completed properties.”

Rentals for prime properties rose by 4 per cent in the first quarter 2014, following a 17 per cent rise in 2014, JLL, a global property consultancy, said in its latest Abu Dhabi Real Estate Overview, released during the Cityscape.

The consultancy, however, believes the removal of a rent cap is expected to lead to rents increasing further this year.

Shortage of good quality units

Asked if Abu Dhabi will face shortage of housing units in coming years, Singh said the emirate will see an undersupply for “good quality, well-managed and well-located” properties.

“A lot of construction that started in 2006-08 has reached completion in 2012-13. But there are no new construction starting of ‘good quality, well managed and well located’ properties and that is going to put an undersupply strain on good quality properties.”

“We saw opportunities and came into the market with our three developments. We are releasing a small number of units in each of these developments which is very manageable and an easy absorbable number.”

The Abu Dhabi-based master developer on Monday launched three new residential developments - Ansam, Al Hadeel and Nareel Island - worth Dh5 billion, which it is showcasing at Cityscape Abu Dhabi.

The first phase of Ansam on Yas Island has 540 apartments; Al Hadeel on the Al Raha Beach Waterfront has 230 units, while Nareel Island has 143 villa plots only for UAE nationals.

Aldar will commence off-plan sales for the three developments next month with construction scheduled to begin in 2015.

Signs of recovery

“It is encouraging to see further signs of growth and recovery. The general theme is selective recovery – with different sectors at a different stage of recovery, and the residential sector leading the way,” said David Dudley, head of JLL’s Abu Dhabi office.

“A two-tier market exists with a significant divergence between high and low quality product (in terms of quality of location, design, functionality, asset management, etc). Sustained market recovery is very much dependent on continued government investment in infrastructure and economic development to boost demand,” he added.

According to JLL, the number of residential units in Abu Dhabi increased by 1,700 units in the first quarter, bringing the total stock to around 238,000.

Follow Emirates 24|7 on Google News.