Value still a rarity despite price falls

A weaker market has yet to bring the cost of renting a comfortable flat in the capital within the budgets of many residents.

ABU DHABI // Despite a sharp drop in rents, the path towards finding decent, affordable accommodation remains tortuous. Recent reports by property firms indicate a growing willingness among landlords to negotiate on price and to spread payments more evenly throughout the year.

But value-for-money property in the capital remains in scant supply. A good one-bedroom flat in a popular area still commands beyond Dh150,000 (US$41,000) a year, about Dh20,000 less than the market peak late last summer, but still in excess of many budgets. Even the cheapest studios still cost around Dh60,000, often for nothing better than a cramped existence in an old building. Alex Siqueira, 34, a Brazilian chef who has lived in Khalidiya for two years, is on the hunt for a new two-bedroom flat at Dh100,000 to Dh150,000. His search has so far been in vain.

"I looked at the ones in Khalidiya, and they're expensive," he said. "There are no parking spaces. The buildings are old. And it's around Dh170,000. "The landlords are not flexible. They ask for two down payments, which means 50 per cent in 60 days. That's quite a lot." Jonathan Howard, 57, a British communications engineer, has been equally frustrated in his search for a three- to four-bedroom apartment or villa at a budget between Dh150,000 and Dh220,000. However, he has noticed a slight drop in price for his target home.

"I looked at the villas at Al Raha Gardens six months ago, and they were between Dh180,000 and Dh350,000," he said. "I've heard that prices have dropped to around Dh220,000 right now. "I know that prices are dropping, and things might get better, but I don't know if landlords will change the way they do business. "Before I came here, I heard you could get a two-bedroom apartment for Dh90,000, but when I came in October 2007, it was Dh170,000."

Landlords who had advertised their properties on supermarket noticeboards said they had received strong interest from prospective tenants, but admitted being forced to offer extra incentives. Hassan Ahmed, 50, an Emirati renting a three-bedroom flat opposite Zayed Souq in Zayed City, said he was offering water and electricity free of charge. "I was renting it at Dh185,000," he said. "Because the electricity and water is free I got a lot of calls. In two days I think I got five or 10. And it was immediately rented after the third day of putting the ad.

"The problem is that people want to pay monthly, or bi-monthly. Rarely do they pay yearly. If they pay a reasonable amount monthly, then that's good. Paying monthly is appealing to buyers." On the subject of falling rents, he added: "It didn't drop that much in Abu Dhabi, not as much as it dropped in Dubai." Meanwhile, a Frenchwoman, who did not want to be named, reported slim interest in her flat in the Tourist Club Area, which she was offering for Dh5,000 a month.

The area was identified in a second-quarter market report by Asteco, the property services firm, as one experiencing a rapid drop in average rents owing to the redevelopment of Salam Street. [e-mail]