Abu Dhabi residents could see an increase in municipality fees under new plans that have been outlined by the emirate's Executive Council. The move would only affect non-Emiratis and could help to boost property sales, as measures have been introduced to encourage home ownership in the past few months.
A circular from the Executive Council, which was seen by The National, has set out plans to increase the fee from 3 per cent for residential properties only.
The extent of the increase is not yet clear, but different rates could be applied for villas and apartments. It is also unclear if or when the higher rates will be introduced, but the law is already in effect.
The move follows the introduction of the 3 per cent charge to the value of an annual rental contract for tenants in Abu Dhabi last year. Emiratis are exempt.
The municipality fee was originally announced in February 2016 and was collected through Abu Dhabi Distribution Company bills.
Funds gathered through the fee go towards municipality use.
It is the latest in charges that have been introduced as the country seeks to diversify from oil and gas to a knowledge-based economy.
VAT at 5 per cent was imposed from January 1, while a 100 per cent tax on cigarettes and 50 per cent charge on energy drinks was brought in last October.
The most recent figures from the Statistics Centre Abu Dhabi show that consumer prices rose by 2.7 per cent in the first three months of this year, compared with the same period in 2017.
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Read more on the municipality fee:
Q&A: What Abu Dhabi’s 3 per cent municipality fee means for you
Homeowners off the hook for Abu Dhabi’s three per cent municipality fee
Abu Dhabi cost of living increase leaves residents feeling the squeeze
Abu Dhabi homeowners told to alter value of homes to avoid municipality fee
Abu Dhabi property owners wrongly billed for municipality fees
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Experts say any fee rise could lead to a further reduction in rents over the short term and could boost property sales.
“Tenants only have so much to spend on rent so it means they will spend that much less,” said Ben Crompton, managing partner of Crompton Partners.
“It will put more pressure on rents as soon as it comes in because people will be bargaining harder with their landlords and trying to find this money elsewhere.
“Either they downsize to save that money or they bargain harder to get the rent dropped so they are not paying any extra.”
Data compiled by the property website Bayut.com shows residential rents in Abu Dhabi fell by as much as 22 per cent during the first three months of the year.
Mr Crompton said landlords were working harder than ever to attract and retain tenants, so this move should elicit a reaction from them. If the fees for villas are greater than apartments, it is believed their rent prices could come down even more.
"If villas are charged at a higher rate, then people will have a decision between an apartment and a villa and will choose an apartment," he said.
“So landlords of villas will have to be more aggressive about rent to attract tenants. It will put more pressure on rents in villas than apartments.”
Imran Ellam, senior residential consultant at BespokeAD, said people could now be more selective in what is already a tenants’ market.
“They could use it as a negotiating tool,” Mr Ellam said.
As for sales, the same Bayut report said there was renewed interest in off-plan properties in Abu Dhabi this year.
This comes as the UAE announced plans to introduce visas of up to 10 years for experts working in the medicine, science, research and technical fields.
Also included are foreign investors establishing a business. This could, in theory, have more people thinking about buying a home here.
“This doesn’t apply to homeowners,” Mr Crompton said. “So if you were thinking about buying now could be the time because you won’t be subject to this municipality fee.”
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Favourite country: UAE
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There are numerous success stories of teen businesses that were created in college dorm rooms and other modest circumstances. Below are some of the most recognisable names in the industry:
- Facebook: Mark Zuckerberg and his friends started Facebook when he was a 19-year-old Harvard undergraduate.
- Dell: When Michael Dell was an undergraduate student at Texas University in 1984, he started upgrading computers for profit. He starting working full-time on his business when he was 19. Eventually, his company became the Dell Computer Corporation and then Dell Inc.
- Subway: Fred DeLuca opened the first Subway restaurant when he was 17. In 1965, Mr DeLuca needed extra money for college, so he decided to open his own business. Peter Buck, a family friend, lent him $1,000 and together, they opened Pete’s Super Submarines. A few years later, the company was rebranded and called Subway.
- Mashable: In 2005, Pete Cashmore created Mashable in Scotland when he was a teenager. The site was then a technology blog. Over the next few decades, Mr Cashmore has turned Mashable into a global media company.
- Oculus VR: Palmer Luckey founded Oculus VR in June 2012, when he was 19. In August that year, Oculus launched its Kickstarter campaign and raised more than $1 million in three days. Facebook bought Oculus for $2 billion two years later.
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The five pillars of Islam
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Top 10 most competitive economies
1. Singapore
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3. Denmark
4. Ireland
5. Hong Kong
6. Sweden
7. UAE
8. Taiwan
9. Netherlands
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New Zealand win by 47 runs
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Name: Direct Debit System
Started: Sept 2017
Based: UAE with a subsidiary in the UK
Industry: FinTech
Funding: Undisclosed
Investors: Elaine Jones
Number of employees: 8
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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.”
If you go
There are regular flights from Dubai to Kathmandu. Fares with Air Arabia and flydubai start at Dh1,265.
In Kathmandu, rooms at the Oasis Kathmandu Hotel start at Dh195 and Dh120 at Hotel Ganesh Himal.
Third Rock Adventures offers professionally run group and individual treks and tours using highly experienced guides throughout Nepal, Bhutan and other parts of the Himalayas.
The low down on MPS
What is myofascial pain syndrome?
Myofascial pain syndrome refers to pain and inflammation in the body’s soft tissue. MPS is a chronic condition that affects the fascia (connective tissue that covers the muscles, which develops knots, also known as trigger points).
What are trigger points?
Trigger points are irritable knots in the soft tissue that covers muscle tissue. Through injury or overuse, muscle fibres contract as a reactive and protective measure, creating tension in the form of hard and, palpable nodules. Overuse and sustained posture are the main culprits in developing trigger points.
What is myofascial or trigger-point release?
Releasing these nodules requires a hands-on technique that involves applying gentle sustained pressure to release muscular shortness and tightness. This eliminates restrictions in connective tissue in orderto restore motion and alleviate pain. Therapy balls have proven effective at causing enough commotion in the tissue, prompting the release of these hard knots.
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This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
Living in...
This article is part of a guide on where to live in the UAE. Our reporters will profile some of the country’s most desirable districts, provide an estimate of rental prices and introduce you to some of the residents who call each area home.
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