Abu Dhabi house prices have risen by as much as 26 per cent over the past year, helped by an influx of government employees relocating to the capital and improving investor sentiment.
According to the property broker Asteco an influx of Abu Dhabi government employees moving to the capital to comply with a government housing decree and a general improvement in sentiment pushed up average house prices in the city 14 to 26 per cent over the year to September.
The news comes as the UAE real estate industry prepares to gather for the biggest property show in the region, the Cityscape exhibition, which is expected to attract an increase in exhibitor and visitor numbers on the back of soaring Dubai house prices.
Asteco said that a shortage of new homes on the Abu Dhabi market was pushing up prices as the city continues to recover from the global financial crisis, during which house prices boomed and then plunged by more than half.
Prices of apartments at Aldar's Al Raha Beach on the outskirts of the city rose 19 to 26 per cent in the year to the end of last month, with some of the smaller units in Al Bandar sold at Dh1,520 per square foot.
The broker reported that apartment prices in Tamouh's Marina Square on Reem Island rose 14 per cent over the year while prices at Aldar's Sun & Sky Towers, also on Reem, rose 18 per cent.
Villa prices also rose during the year, the broker said. Reef Villas experienced the biggest price increases, Asteco reported, with prices for five-bedroom villas increasing 24 per cent to Dh2.6 million in the 12 months to the end of September. Prices for villas in Golf Gardens rose 9 per cent over the year, while those in Al Raha Gardens rose 13 per cent.
However, the broker said that despite the increases house prices in the capital remain 20 to 50 per cent below their 2008 peak levels.
“While prices are moving upwards very quickly, investors should be confident that there is no bubble scenario imminent. If we compare [third quarter] 2013 prices for these developments to the 2008 boom, it’s an altogether different picture,” said Jeremy Oates, the general manager of Abu Dhabi at Asteco Property Management.
He added that apartments in Marina Square which were completed in 2012, are currently selling for rates 43 per cent below the rates they were selling off plan in 2008. Those in Sun & Sky, a development completed in 2011, are worth 50 per cent of their 2008 off-plan price.
Reef Villas remain 29 per cent lower than their 2008 peak, while sales prices for villas in Golf Gardens and Al Raha Gardens are still 28 per cent and 26 per cent below 2008 levels.
Asteco predicted that house price growth is likely to slow as the amount of new supply coming on to the market increases, with Aldar beginning to hand over 3,500 new apartments in its The Gate Towers project before the end of the year.
It added that if Tamouh completes its 13-building City of Lights scheme as scheduled by the end of next year price growth in the city could be further slowed. However, it suggested that further delays on the vast project seemed likely.
Unlike neighbouring Dubai, where house prices started to rise last year, the Abu Dhabi housing market experienced little movement until mid-2013. Last week brokers reported that apartment prices in Dubai rose by up to 42 per cent over the year to September, while villa prices increased 26 per cent.
Asteco said housing rents in the investment areas of Abu Dhabi were also rising quickly as government workers who had been forced to relocate to the capital moved into newer apartments.
Rents for luxury apartments in the city rose by 20 to 29 per cent over the year, Asteco reported, although in some buildings this was restricted by the majority of tenants remaining put.
“Prime properties such as Nation Tower and St Regis Residences have seen little growth, given the limited availability in the market. However, if any of the desirable units were to become vacant, we believe that potential tenants would be willing to pay a significant premium on current rates,” said Mr Oates.
lbarnard@thenational.ae
Ten tax points to be aware of in 2026
1. Domestic VAT refund amendments: request your refund within five years
If a business does not apply for the refund on time, they lose their credit.
2. E-invoicing in the UAE
Businesses should continue preparing for the implementation of e-invoicing in the UAE, with 2026 a preparation and transition period ahead of phased mandatory adoption.
3. More tax audits
Tax authorities are increasingly using data already available across multiple filings to identify audit risks.
4. More beneficial VAT and excise tax penalty regime
Tax disputes are expected to become more frequent and more structured, with clearer administrative objection and appeal processes. The UAE has adopted a new penalty regime for VAT and excise disputes, which now mirrors the penalty regime for corporate tax.
5. Greater emphasis on statutory audit
There is a greater need for the accuracy of financial statements. The International Financial Reporting Standards standards need to be strictly adhered to and, as a result, the quality of the audits will need to increase.
6. Further transfer pricing enforcement
Transfer pricing enforcement, which refers to the practice of establishing prices for internal transactions between related entities, is expected to broaden in scope. The UAE will shortly open the possibility to negotiate advance pricing agreements, or essentially rulings for transfer pricing purposes.
7. Limited time periods for audits
Recent amendments also introduce a default five-year limitation period for tax audits and assessments, subject to specific statutory exceptions. While the standard audit and assessment period is five years, this may be extended to up to 15 years in cases involving fraud or tax evasion.
8. Pillar 2 implementation
Many multinational groups will begin to feel the practical effect of the Domestic Minimum Top-Up Tax (DMTT), the UAE's implementation of the OECD’s global minimum tax under Pillar 2. While the rules apply for financial years starting on or after January 1, 2025, it is 2026 that marks the transition to an operational phase.
9. Reduced compliance obligations for imported goods and services
Businesses that apply the reverse-charge mechanism for VAT purposes in the UAE may benefit from reduced compliance obligations.
10. Substance and CbC reporting focus
Tax authorities are expected to continue strengthening the enforcement of economic substance and Country-by-Country (CbC) reporting frameworks. In the UAE, these regimes are increasingly being used as risk-assessment tools, providing tax authorities with a comprehensive view of multinational groups’ global footprints and enabling them to assess whether profits are aligned with real economic activity.
Contributed by Thomas Vanhee and Hend Rashwan, Aurifer
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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Third Test, Day 1
New Zealand 229-7 (90 ov)
Pakistan
New Zealand won the toss and elected to bat
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Engine 6.9-litre twin-turbo W12
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RESULTS
5pm: Maiden (PA) Dh80,000 1,600m
Winner: Raghida, Szczepan Mazur (jockey), Ibrahim Al Hadhrami (trainer)
5.30pm: Maiden (PA) Dh80,000 1,600m
Winner: AF Alareeq, Connor Beasley, Ahmed Al Mehairbi
6pm: Arabian Triple Crown Round-2 Group 3 (PA) Dh300,000 2,200m
Winner: Basmah, Fabrice Veron, Eric Lemartinel
6.30pm: Liwa Oasis Group 2 (PA) Dh300,000 1,400m
Winner: AF Alwajel, Tadhg O’Shea, Ernst Oertel
7pm: Wathba Stallions Cup Handicap (PA) Dh70,000 1,600m
Winner: SS Jalmod, Richard Mullen, Satish Seemar
7.30pm: Handicap (TB) Dh100,000 1,600m
Winner: Trolius, Ryan Powell, Simon Crisford
Mohammed bin Zayed Majlis
Results
3pm: Maiden Dh165,000 (Dirt) 1,400m, Winner: Lancienegaboulevard, Adrie de Vries (jockey), Fawzi Nass (trainer).
3.35pm: Maiden Dh165,000 (Turf) 1,600m, Winner: Al Mukhtar Star, Adrie de Vries, Fawzi Nass.
4.10pm: Handicap Dh165,000 (D) 2,000m, Winner: Gundogdu, Xavier Ziani, Salem bin Ghadayer.
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5.20pm: Handicap Dh185,000 (D) 1,600m, Winner: Moqarrar, Dane O’Neill, Erwan Charpy.
5.55pm: Handicap Dh175,000 (T) 1,800m, Winner: Dolman, Richard Mullen, Satish Seemar.
Springsteen: Deliver Me from Nowhere
Director: Scott Cooper
Starring: Jeremy Allen White, Odessa Young, Jeremy Strong
Rating: 4/5
