By Courtney Trenwith
Senior executive at UAE developer also says 5-8% rent increase is 'steady, not a spurt'
Abu Dhabi renters will soon follow in the footsteps of their counterparts in Dubai and opt to buy property, a senior executive of the emirate’s leading developer predicts.
Rents across Aldar Properties’ portfolio have increased 5-8 percent since the start of the year, chief development officer Gurjit Singh said.
The growth has been partly fuelled by the government’s new policy not to pay housing allowances to employees of any of its entities who live outside Abu Dhabi.
“It has increased demand for a lot of the good locations, the more established locations where the residential portfolios are being managed well and [have] good amenities around it,” Singh said.
“We’ve seen our occupancy inch up. In terms of rental over the last three-quarters we’re seeing rentals edging up anything between 5-8 percent across the board.
“I think that’s very healthy and steady, they’re not sudden spurts of increase, they’re very steady increases and I think that bodes well for the market in Abu Dhabi because you’re suddenly seeing a very strong, sustainable demand coming into place.”
Aldar Properties, which has been focusing on strengthening its balance sheet since the economic crisis, has reached about 95 percent occupancy across its residential properties, which account for about half the company’s revenue.
Singh said renters would soon settle and become increasingly interested in purchasing Abu Dhabi property.
“What we’re seeing first is people coming to rent and then when times goes on from now, those who are having a permanent stay in Abu Dhabi they will probably want to invest and put the equity into real estate,” he said.
“You’ll probably see something happen in about 12 months or so.”
Dubai renters have been turning into buyers in droves this year as rents soar and interest rates fall, according to mortgage brokers and industry analysts.
In many cases across the emirate, it is now comparable or cheaper to pay the monthly mortgage repayments than rent, provided the buyer has a 20 percent deposit.
Singh said it was an opportunity for Aldar Properties, which is partly owned by the government.
“We’re building up a strong recurring income base as a lot of people are coming to rent, then an opportunity for a developer like us is to turn the renter into a purchaser,” he said.
“I think it’ll be a dual focus; there would certainly be people who want to buy our existing properties and, where we can, new developments that come on stream in the coming years, because we see strong, steady, sustainable demand in Abu Dhabi in the next year.
There are no plans to branch out of Abu Dhabi, where Aldar Properties also built the Formula 1 track on Yas Island and other retail and hospitality developments.
“At the present moment our focus is Abu Dhabi,” he said.
“Options are always open but the focus has always been Abu Dhabi because of its strong high net worth base.”For all the latest real estate news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
A hopeful prediction without any solid grounds. By the way, the point about renters in Dubai turning into buyers in "droves" is not entirely true. Opinions by mortgage brokers, who obviously have a vested interest can not be considered as fact without actual numbers
yeah yeah everyone in Dubai is buying not renting, Aldar.