Landlords in Abu Dhabi are starting to offer creative deals as they look for new ways to woo tenants in an increasingly competitive market.
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Etihad Towers, the new five-tower development on the waterfront, is pitching renters a discount of almost 10 per cent if they sign a long-term lease. Other landlords are including appliances and light fixtures in apartments and offering tenants the opportunity to pay the lease in four to six cheques, instead of one or two.
"In 12 months the market for high-end homes will be much more tenant-favourable," said Matthew Green, the head of research and consultancy for CB Richard Ellis in the UAE. "If you're a landlord you're going to be proactive."
The average rent for a two-bedroom apartment in Abu Dhabi has fallen by 44 per cent since the peak in 2008, according to Jones Lang LaSalle research. Another 50,000 villas and apartments are scheduled for completion by the end of 2013, putting more pressure on landlords to sign up tenants.
In addition to Etihad Towers, new projects include the Sun and Sky towers and Marina Square on Reem Island, and the Al Ain Tower in Khalidiya. All include swimming pools, fitness centres and the type of amenities rarely found in Abu Dhabi.
"Existing landlords have to compete with that," said Loshini Lawrence, the Abu Dhabi operations manager for Better Homes, a property agency.
The projects in the freehold areas of Reem Island and Raha Beach have also introduced a group of landlords to the Abu Dhabi market - expatriates looking to rent out their newly delivered villas and apartments.
Many expats have mortgage payments and are eager to find tenants. And they are far more flexible on terms, including the Abu Dhabi standard of insisting on one cheque for a year's mortgage.
Four to six cheques are now more commonplace and some independent landlords are even offering monthly deals, which was unheard of as recently as a year ago.
"Expat landlords are much more willing to accept multiple cheques," said Paul Maisfield, the general manager of the Abu Dhabi office for Asteco, a property management firm. Many older landlords have been slow to recognise changes in the market, agents say.
"We still do a lot of education about pricing," Ms Lawrence said. "It takes a lot of negotiation to get to the point about what they can offer."
Deals are still hard to find in the central area of Abu Dhabi, but are growing increasingly common off-island and in outlying areas such as Khalifa City, agents say.
"We're definitely seeing more competition among landlords [off-island] and they are willing to lower their rent significantly," Mr Green said. "There is a growing disparity between the two areas."
Overall rental rates declined 6 per cent in Abu Dhabi in the third quarter compared with the previous quarter, according to Asteco research.
A two-bedroom apartment in a prime building on the Corniche rents for between Dh140,000 (US$38,115) and Dh165,000 a year, down 3 per cent from the end of the second quarter. The range for a two-bedroom apartment in Mussafah is Dh60,000 to Dh75,000, a 7 per cent drop from the previous quarter.
Landlords would rather offer tenants incentives, such as appliances or a discount for fewer cheques, than lower advertised rental rates any further, agents say. Even the big developments are starting to look for creative ways to attract tenants, as evidenced by the rent-to-own programmes offered by Sorouh Real Estate and Aldar Properties.
"Developers are not used to operating in this type of market," said Paul Preston, the managing director of Elysian Properties.
