Update
:
[ New municipal fees have come into effect - and are backdated to February ]
Expatriate tenants in Abu Dhabi will have to pay 3 per cent extra on their rent, as a municipality contract fee.
The new charge will be collected with monthly electricity and water bills, and will add about Dh5,000 to the cost of renting an average two-bedroom apartment. UAE nationals are exempt.
The decision to levy the new fee was published in February's Official Gazette. Officially, therefore, the charge is already in operation, but it is not known when collection will begin in practice.
The levy brings Abu Dhabi in line with Dubai, which imposes a 5 per cent municipal housing tax payable on utility bills.
"This surcharge on a rental fee coming through the water bill is the same as the Dubai housing charge, but that's 5 per cent," said Mario Volpi, head of projects at Asteco Property Management.
"Abu Dhabi is charging 3 per cent so it shouldn't be too much of a dent to tenants. It is obviously something they are going to have to factor in."
Declan McNaughton, UAE managing director of the property consultancy Chestertons, said the charge was another expense at a time when many residents were already complaining about the cost of living.
"People are now clawing on to some of their jobs. This 3 per cent will be another added pressure," he said.
"For every action, there is an equal and opposite reaction, which means if I was coming up for my tenancy renewal, I would have a good battle with my landlord to say either he takes that on board, he does a rent review or, worst case scenario, I would ask if he wanted to split it 50-50.
"Because I guarantee you very few people got a pay rise in Abu Dhabi this year, and an added 3 per cent, if you're in a Dh200,000 lease, it's another expense."
Public reaction to the new charge will be monitored closely, said Dr Abdulla Al Bloushi, head of land and property management at the muncipality..
"If there is a complaint from different people or sectors, they will take it into consideration," he said. "The job of the government is to make people happy.
"So if there is a complaint, and it is a valid complaint, then I think the government will take action. They will find a way of making things better."
Details of the new fee emerged yesterday on the opening day of the annual Abu Dhabi Cityscape exhibition, which sets the tone for property investment sentiment in the capital.
P?K Ashraf, an Abu Dhabi resident at the show to look at potential property investments, acknowledged the fee represented another expense but said it was unlikely to deter purchases.
"Things are getting difficult, starting from the parking charges and everything, but I don't know - people get used to it," he said.
The rental contract fee follows the introduction of a new levy of 4 per cent on the price of hotel stays, also announced this week.
Governments and municipal authorities across the region are seeking new sources of revenue following the rapid decline of the price of oil from above $110 a barrel in June 2014 to about $43 yesterday. Value added tax, or VAT, is expected to be introduced across the GCC by the end of 2018.
mfahy@thenational.ae
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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.”
Nepotism is the name of the game
Salman Khan’s father, Salim Khan, is one of Bollywood’s most legendary screenwriters. Through his partnership with co-writer Javed Akhtar, Salim is credited with having paved the path for the Indian film industry’s blockbuster format in the 1970s. Something his son now rules the roost of. More importantly, the Salim-Javed duo also created the persona of the “angry young man” for Bollywood megastar Amitabh Bachchan in the 1970s, reflecting the angst of the average Indian. In choosing to be the ordinary man’s “hero” as opposed to a thespian in new Bollywood, Salman Khan remains tightly linked to his father’s oeuvre. Thanks dad.
Zayed Sustainability Prize
