To rent or buy in Abu Dhabi? Here is how both sales and leases are interlinked

Published April 23rd, 2014 - 10:11 GMT

The factors that are driving Abu Dhabi’s rents in the residential space will also have a role on the sales cycle.

First was the announcement that employees at Abu Dhabi government entities will have to be resident in the emirate and not have their place of domicile anywhere else. That, in one stroke, fed the rental increases in the first-half of last year.

Then, in the fourth quarter, there was the removal of the rental cap. For sure, what it has done is raise rentals in the emirate, by 17 per cent year-on-year and by 4 per cent during the first three months of the year, according to JLL estimates. So, without the rent cap, there is nothing to suggest that landlords will refrain from asking as much as they can. And with limited immediate availability of ready to move in housing stock, they are getting what they want.

Replacing the rental cap will be a new index, to be introduced later in the year. It will be created by dividing the city into 10 to 12 zones, based on what each area commands, according to JLL. The future index will be starting off from a higher base level, given that it would incorporate the major hikes various parts of the city has already been witness to. So, the higher rents now could yet be the basis for future calculations.

By all calculations, rents in Abu Dhabi are on incline, with only the rate of increase varying with each quarter.

Whether this will be cause enough for end-users to get active in the upcoming off-plan sales launches is the moot point. The market will not have to wait long to gauge how it will shape up — Aldar begins sales of its two new projects in May. Based on how this plays out, other developers will be deciding on the timing of their own programmes.

Next month, thus, will be a bell-weather to spot short-term trends in Abu Dhabi’s property sales market.

“Sustained market recovery is very much dependent on continued government investment into infrastructure and economic development to boost demand,” said David Dudley of JLL.

By Manoj Nair


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