Capital now a tenants' market

While not quite the steep discounts seen in Dubai the Abu Dhabi rental market is becoming more flexible as landlords step away from insisting on the annual cheque.

Leases that permit multiple payments and discounted rents are becoming more common in the Abu Dhabi property market.

Times have changed for Abu Dhabi apartment hunters, with landlords offering deals that were unheard of a few years ago.

While not as dramatic as the situation in Dubai, where monthly rent payments and steep discounts are rapidly becoming the norm, the capital's rental market is slowly loosening up, industry executives say.

"Landlords are absolutely starting to negotiate," said Linda Loughnane, the managing director of LLJ Property, an Abu Dhabi property firm. "The realisation is the market is making these demands and there are multiple options" for renters, she said.

Leases that permit multiple payments - rather than a full year's rent being required up front - and discounted rents are becoming more common, observers say, while existing tenants are often offered substantial discounts to stay.

In the past, agents demanded viewing charges, usually Dh100 to show prospective tenants an apartment, and would not accept multiple, dated cheques to cover rent, said Abdul Salam April, a restaurant manager who arranges accommodation for his staff.

Last month, when he was searching for an apartment, there were no viewing charges and he signed a deal to use three cheques to pay the rent.

Landlords' willingness to accept more than one cheque, the traditional standard for the market, may be the most significant change.

In the past year the Dubizzle website has attracted a growing number of Abu Dhabi advertisements offering "flexible payments," said Hassan al Shouli, Dubizzle's marketing manager. Abu Dhabi rental listingshave doubled in the past two months, he said. He added that a few have even advertised a willingness to accept monthly payments.

"It is much more common to have two cheques [in Abu Dhabi], while before it was dead out of the question," said Peter Samaha, a partner in Quest Property Services in Abu Dhabi. "Now it's perfectly reasonable for people to ask for that."

However, deals vary depending on the type of buildings, industry executives say. In older buildings prices might have come down 25 to 30 per cent in the past year, but many of the owners of newer buildings are still reluctant to negotiate.

"There is a big difference in quality," Mr Samaha said. Norman Yap said he found landlordswere "more aggressive" when he started searching for an apartment last month. The interior contractor ultimately rented a one-bedroom apartment on Muroor Road for an annual rate of Dh60,000 (US$16,335).

"Prices were reduced quite a lot," he said.

Mr Yap's landlord offered to allow him to pay with two cheques for the year but ultimately reduced the price by Dh5,000 in exchange for Mr Yap paying the full year's rent in one sum. Rents in Abu Dhabi have been declining for the past year.

In the third quarter of last year, rates fell 5 per cent overall but declined 16 per cent in the Corniche area, compared with the same period a year earlier, according to Landmark Advisory, a research firm. A wave of new apartments coming on to the market, including more than 4,500 units due to be available on Reem Island in the capital in the first half of this year, will drive prices down further, Landmark predicted in a recent report.

"These new developments will upset the market, leading to a complete recalibration of rents around the new developments, which often offer better amenities and facilities," Landmark said.

When Frank Kettner, an electrical engineer, started searching for an apartment two weeks ago, he found the market in Abu Dhabi had changed considerably from the past time he was in the city two years ago.

"It's easier," he said. "There are a lot of flats on the market."

Mr Kettner said he was offered discounts ranging from Dh5,000 to Dh10,000 before he settled on paying Dh100,000 for a two-bedroom apartment in Al Reef.

Some renters, however, are still finding it a tough market. George Marino, from Zurich, said he was surprised by the high prices when looking for an apartment in Al Bandar, a new development.

Landlords were "sitting on prices", he said. "They're very rigid, especially [the landlords] who bought at the high end." He eventually agreed to pay an annual Dh120,000 for a two-bedroom apartment looking on to a construction site.

"Given the upcoming supply increase, [the rent] is far too high," Mr Marino said.