Apartment hunters with a taste for luxury will soon find a tantalising array of five-star rental options coming on to the market on Abu Dhabi island.

Several towers are scheduled to open on or near the Corniche in the next few months, offering more than 1,400 apartments with rooftop pools, health clubs and all the modern amenities. For the first time, the capital will have the type of high-end apartment towers common in Dubai.

“I see a lot of people moving back from Dubai because we have the quality now,” says Almer Agmyren, the managing director of Rex Real Estate. “There really hasn’t been the quality in Abu Dhabi.”

The list of nearly completed projects includes Etihad Towers, the collection of five blocks near the Emirates Palace hotel. There is also the 47-storey Seba Tower, now known as Al Ain Tower and commonly known as the “wobbly building”, near Spinneys market, and Nation Towers, which is next to the Hilton Corniche.

“These three will be setting the ceiling for the market,” says Paul Maisfield, the general manager of the Abu Dhabi office for Asteco,a property management company. “All three are competing for the high-end market.”

Prospective tenants have been told the first of the 885 apartments in Etihad Towers will be available on October 15. The project involves three towers ranging from 55 to 75 storeys.

Annual rents in the Etihad Towers apartments range from a low of Dh100,000 (US$27,227) for a 67-square metre one bedroom to Dh972,000 for a 732-sqmetre penthouse. A two-bedroom, 160-sq metre apartment is listed at about Dh225,000.

Al Ain Tower, which is expected to offer similar pricing, is also scheduled to open by the end of October, agents have been told. Nation Towers is likely to open in the spring.

The new apartments, along with the recently opened Capital Plaza near the Sheraton Corniche, are already popular with home hunters.

“Anything on the Corniche is literally like a jewel in the crown,” says Steve Morgan, the head of the UAE office for the property consultancy Cluttons. “They are filling a niche in the marketplace for people who can afford it.”

People looking to rent who are willing to pay for top-of-the-line luxury have few options in Abu Dhabi.

A 7,500-sq foot penthouse with a wide terrace in Al Bandar on Raha Beach is currently listed for Dh600,000 a year. On the main island, a 10,700-sq ft penthouse in Khalidiya is available for Dh800,000 a year.

But the new towers will add variety and depth to the menu of choices in the city, offering a lifestyle “not really offered yet in Abu Dhabi”, Mr Maisfield said. The projects include the types of pools, saunas, health clubs and restaurants with spectacular views that are still a rarity in central Abu Dhabi.

“They have the amenities and the location,” says Eduarda Silveira, a consultant with the estate agency Better Homes.

The new choices could put further pressure on already falling rents around the island. The average rent for a two-bedroom apartment is down more than 40 per cent since the peak in 2008, according to Jones Lang LaSalle data.

Most analysts expect rents to continue to fall in the next year as more projects come on to the market.

“They will definitely have a knock-on effect,” says Mr Maisfield. “If it does get competitive, there will have to be an impact on the rest of the market.”

Asteco has also said that new projects are “leading to a significant rise in leasing enquiries, predominantly from existing residents looking for better value for money and upgrades”.

The new towers on the Corniche are coming on to the market at the same time as thousands of apartments are being completed on Reem Island and Raha Beach. Jones Lang LaSalle predicts that 16,000 new homes will be completed in Abu Dhabi this year.

But some experts doubt the Corniche towers will draw people away from the off-island developments.

“It’s a totally different product,” says Ms Silveira.

Reem and Raha developments are attracting younger renters and people looking for an easy commute to Dubai, she said. The Corniche projects will probably attract older renters and families that want more of a city lifestyle.

But annual rents of more than Dh150,000 for a two-bedroom apartment will put off many people. At that price, they have the option of paying less to lease a villa, which is the preferred option for many families. Two-bedroom villas in Abu Dhabi rent for about Dh110,000 a year, according to Asteco’s latest research report.

But the new towers on the Corniche will make home hunters think twice about their current apartments. Managers of older buildings may find it difficult to keep current tenants, unless they lower rent and upgrade their services.

“We will see a flight to quality,” says Mr Agmyren.

kbrass@thenational.ae

Abu Dhabi home rental rates continue to slide, providing opportunities for house hunters looking for bargains.

Al Raha Beach

The average rental price dropped 9 per cent in the second quarter from the previous, according to data released Tuesday by Asteco, the property management firm.

Rates are down anywhere from 25 to 40 per cent in the last year, depending on the neighbourhood, said Paul Maisfield, general manager of Asteco’s Abu Dhabi office

“It’s a tenant-led market at the moment,” Mr Maisfield said. “A lot of supply is coming on line when demand is not there.”

Two bedroom apartments in a quality development on the Corniche are now renting for between Dh140,000 and Dh170,000 a year, the company reported. One of the few exceptions to the trend is Al Bandar on Raha Beach, where two bedroom apartments are attracting between Dh140,000 and Dh180,000.

Villas in Al Reef also witnessed a small increase in rates.

But the completion of several new projects, including apartments in Al Zeina in Al Raha and 516 townhomes in Al Reef, is likely to continue to drive down rates.

“We haven’t had an influx of new people coming in,” Mr Maisfield said. “It’s just bad timing for the market.”

More than 16,000 residential units are scheduled for completion in the next year, according to Jones Lang Lasalle. Projects on Reem Island, Raha Beach and Etihad Towers will offer new choices for renters.

“It will be an interesting six months,” Mr Maisfield said. “These developments will set important benchmarks for the market.”

A two-bedroom apartment is available for Dh125,000 a year in Sun and Sky towers on Reem Island, which started handing over units earlier this year.

“Everybody else will have to adjust accordingly,” Mr Maisfield said.

Aldar properties made its biggest gain in more than two weeks yesterday, snapping a six-day streak of trading losses as investors speculated about a positive surprise from first-quarter results.

Shares in Abu Dhabi’s largest publicly traded developer closed 2 per cent higher at Dh1.55 on the Abu Dhabi Securities Exchange, their highest since April 17. Aldar has declined by 6 per cent since April 24.

Sorouh Real Estate, the second-largest developer in the emirate, added 2.8 per cent, its biggest gain since April 19. The Abu Dhabi Securities Exchange General Index was unchanged at 2,692.02 points.

“Investors who are expecting first-quarter results to beat expectations are building their positions,” said Ameed Kanaan, the general manager at AlJazeera Financial Services brokerage in Dubai. A consensus of analyst estimates at Bloomberg News expects the developer to post a loss of Dh195.8 million.

Property and construction stocks fell in Dubai. Emaar Properties, the developer of the Burj Khalifa, lost 0.3 per cent to close at Dh3.24. Union Properties, the company behind Dubai’s Motor City, declined 0.9 per cent to 40 fils a share, while DeyaarDevelopment lost 0.6 per cent to 31 fils. The Dubai Financial Market was unchanged at 1,627.86.

Aldar Properties has elected a new chairman from the top ranks of Mubadala Development to replace Ahmed al Sayegh, the company’s departing leader.

Abu Dhabi’s largest property developer will be chaired by Ali Eid al Mehairi, a UAE national who heads Mubadala Infrastructure.

The change was announced at the company’s annual meeting on Yas Island yesterday.

“On behalf of the new board, I would like to take this opportunity to thank the departing board members who have served the company since February 2008,” Mr al Mehairi said.

Mubadala, a strategic investment company owned by the Abu Dhabi Government, holds a 27.7 per cent stake in Aldar.

This year, after Aldar posted losses of Dh12.6 billion (US$3.43bn) for 2010 following impairments and fair value changes, the developer issued a Dh2.8bn convertible bond to Mubadala. If converted, the bond would bring Mubadala’s stake to between 50 and 54 per cent, analysts say.

An appointment from Mubadala did not come as a surprise to the market, said Majed Azzam, a property analyst at Alembic HC Securities. “Given the increased ownership, it would make sense for any investor with such a substantial stake in a company to have someone on the board,” Mr Azzam said.

On a 180 hectare site near Abu Dhabi Golf Club, workers scurry over scaffolding and lorries bring in supplies for long rows of partly built villas.

In many places around the country, half-finished housing projects sit dormant as developers look for buyers and financing. But these 1,370 properties under construction by Sorouh Real Estate are already 100 per cent sold, with a long waiting list for vacancies.

The development, Watani, is a national housing project sponsored by the Government to provide homes for Emirati citizens. Started in January last year, it is the first government housing project for Sorouh, which is best known for its towers on Reem Island and luxury villas of Golf Gardens.

“We are trying to find other sources of business that will keep us going,” says Fahad Saeed al Ketbi, the chief commercial officer of Sorouh.

With a glut of expensive units already in the pipeline, Abu Dhabi developers such as Sorouh and Aldar Properties are increasingly turning to affordable housing and government-sponsored projects such as Watani to expand their portfolios.

Sorouh expects to build 8,000 units for national housing worth between Dh20 billion (US$5.44bn) and Dh25bn in the next eight years, Mr al Ketbi says.

The homes will be distributed by the Government to Emirati citizens for free. Sorouh will earn a set fee for building them.

Abu Dhabi’s Urban Planning Council is expected to announce more national housing contracts, as well as supply and demand data for affordable homes at this week’s Cityscape property conference.

The move towards affordable housing projects is “the obvious next step” for developers, says Samia Bouazza, the marketing director for Tamouh, one of the master developers on Reem Island.

“The big buildings are not enough,” Ms Bouazza says. “We need to balance supply.”

Demand for affordable housing is quickly outpacing supply, according to data from the property consultancy Jones Lang LaSalle.

“The bulk of the demographic is really weighted toward the middle and low end,” says David Dudley, the head of Jones Lang LaSalle’s Abu Dhabi office. “But most of the product built has been targeting the high end.”

By 2013, more than 52,000 housing units will be needed for low-income households but there will be only 28,000 units available, according to the consultancy’s research. In the mid-income category, there will be only 66,000 units available compared with a need for more than 76,000 units.

“The bulk of demand is now in the middle and low-end market,” Mr Dudley says.

Abu Dhabi projects targeting nationals are already finding success. Baniyas Investment & Developmenthas announced plans to proceed with the second phase of the Dh3bn Bawabat al Sharq, a master-planned development with 1,300 residential units in Baniyas, on the road from Abu Dhabi to Al Ain.

The first phase of the development, which is geared towards middle-income locals, has sold out, says Wael Tawil, the chief executive of Baniyas Investment. Homes in the second phase start at Dh650,000.

“Local demand is real,” Mr Tawil says. “We know it is increasing.”

Aldar is redesigning parts of the Raha Beach master plan to add more affordable housing units. The company is also building Al Falah, a 5,000-unit government housing project designed for middle-income Emirati families.

National housing projects do not offer developers huge profits, Mr al Ketbi says. But the fees, which are paid by the Government at set stages in the building process, provide developers with a steady cash flow.

The government involvement also means the developer does not need to raise financing or spend money on marketing, and the Government supplies the land.

“It is very low risk” for the developer, Mr al Ketbi says.

Qatar’s index was one of the best performing and rose to its highest point in two months as traders were optimistic on positive first quarter results coming out of the Gulf state.

The QE index ended up 0.9 per cent at 8744.48; its fourth consecutive higher close. The index has gained 2.5 per cent since the beginning of the month.

Property stocks led the momentum on UAE markets as shares in Aldar Properties and Sorouh Real Estate rose 0.7 per cent to Dh1.51 and 1.5 per cent to Dh1.37 respectively.

Dubai shares rose the most since February 16 as the Dubai Financial Market closed up 1 per cent to 1,569.80 points and the Abu Dhabi Securities Exchange edged 0.4 per cent higher to 2,608.50 points.

Amjad Bakir, the trading manager at Mena Corp in Abu Dhabi said volatility in Gulf markets in the past few months had helped break through subdued trading on the region’s exchanges.

“From that time, the market has gone up slowly giving investors more confidence to start buying,” he said.

He added that a bout of dividend payouts have also helped lift shares in specific companies.

Arabtec, the Dubai-based construction company, rose to its highest point in more than two months ahead of the shares trading ex-dividend later this week.

The construction company ended 0.6 per cent higher at Dh1.76 as shareholders were awarded their dividend payments ahead of April 13, when the stock goes ex-dividend.

Elsewhere in the region: Kuwait’s measure closed down 0.1 per cent at 6,339.30 points; Bahrain’s bourse closed up 0.6 per cent at 1419.17 points and Muscat shares end 0.3 per cent higher at 6326.05 points. The Saudi Tadawul is trading down 0.1 per cent at 6,601.36 points. Egypt’s benchmark EGX 30 Index fell 1.4 per cent at 5,348.29 points as renewed tensions from protests in Cairo’s Tahrir Square weighed on sentiment.

HQ, the eye-catching 23-storey circular office building at Al Raha Beach built by Aldar Properties, will welcome its first tenants this week.

Aldar staff and four other firms will transfer into the “Grade A”-quality office building that features concierges, male and female gymnasiums, valet parking and high-speed lifts.

The move will further the development of Abu Dhabi’s “off-island” areas of Al Raha Beach and Khalifa City that are slowly bearing the fruits of the development plans laid out under the emirate’s 2030 plan, which outlines the creation of dynamic communities. HQ’s commercial office space is being matched by newly opened residential developments such as Al Raha Beach, Al Raha Gardens, Khalifa City A and Al Reef Villas that are gradually enticing retailers including Spinneys and Abela to open outlets.

Construction of the 110-metre tall HQ tower began in October 2007 and the project’s estimated cost is US$300 million (Dh1.1 billion).

“We are delighted to be moving into our new home,” said Sami Asad, the chief executive of Aldar. “With the map of our city changing at such a pace, this move positions us close to growing residential communities.”

Aldar will occupy about 20 per cent of the 50,000 square metres available for lease, and said it would be joined immediately by the high-tech companies Advanced Technology Investment Company and Globalfoundries, the Swiss-Swedish engineering company ABB and the UAE Insurance Authority.

Rolls-Royce will also reportedly soon become an HQ tenant. With the new tenants, HQ is about 60 per cent leased, property agents say.

Last September, Aldar welcomed its first tenants for Al Bandar, the first residential project to be opened at Al Raha Beach. Ultimately, the 10km-long coastal Al Raha Beach project is planned to house about 120,000 residents.

The 23-storey circular office building known as The Coin already draws stares from anyone driving past Al Raha Beach on the road between Abu Dhabi and Dubai.

Now HQ, the building’s formal name, is attracting tenants, too.

ABB, a Swedish power and automation technology company, has leased three floors for a total of more than 6,000 square metres in the disc-shaped building, Aldar Properties announced yesterday.

With the new tenant, HQ is about 60 per cent leased, property agents say.

The first tenants are expected to move in next month, according to Rami Nasser, the director of sales for Aldar, which built HQ.

The initial occupiers include Aldar; Advanced Technology Investment Company (Atic), an arm of Mubadala Development, a strategic investment company owned by the Abu Dhabi Government; and Globalfoundries, the semiconductor company controlled by Atic.

Aldar will occupy about 20 per cent of the 50,000 sq metres available for lease. Other signed tenants are reported to include the Insurance Authority of the UAE and Rolls-Royce, which has a variety of joint ventures with Mubadala.

Aldar started seeking tenants in 2009 but was quickly faced with the economic downturn, which complicated the process of finding tenants.

However, leasing agents expect the building to attract interest from companies in older offices in the city, especially international operations.

“HQ is one of only three internationally recognised Grade A buildings available in Abu Dhabi this year,” said Rupert Bowen-Jones, a senior surveyor with CB Richard Ellis (CBRE). “Because of that, there will be very strong take-up in the Grade A sector.”

In addition to the futuristic design, HQ offers tenants a concierge staff, male and female gyms, valet parking, high-speed lifts and “one of the highest car parking ratios in Abu Dhabi”.

ABB is consolidating its Abu Dhabi offices in the building, according to Frank Duggan, the company’s regional manager. ABB will occupy the second, third and fourth floors.

The Swedish company chose the building for its facilities as well as its location “in easy reach of all our stakeholders in the region”, Mr Duggan said. No lease rates were disclosed.

The competition for office tenants is intensifying in Abu Dhabi. About 540,000 sq metres of space is scheduled for completion this year, including International Tower in Capital Centre and four towers at Sowwah Square.

Average office rates in Abu Dhabi have fallen 62 per cent since their peak in the third quarter of 2008, from Dh4,750 (US$1,293) a sq metre to Dh1,800, according to CBRE data.

InterContinental Hotels Group (IHG), the biggest hotel chain in the world, is aiming to increase the number of its hotels in the region by 50 per cent within the next four years, although some of its projects have suffered delays.

The company, based in the UK, with brands including Crowne Plaza and Holiday Inn, has 76 hotels operating in the Middle East and a further 37 under development.

“There’s a lot going on,” said Karin Sheppard, the vice president commercial for IHG in the Middle East and Africa. “Here in the UAE, which is a strong market for us, we currently have 16 hotels and another six in the pipeline.”

IHG this month took over the management of the former Marriott Renaissance hotel in Deira, Dubai. As part of the change, the property is to undergo a US$55 million (Dh202m) refurbishment. In Dubai, IHG has Crowne Plaza hotels under development in Business Bay and in the International Media Production Zone.

“The market has had a slowdown and projects have slowed down compared to first projections,” said Ms Sheppard.

In Abu Dhabi, an InterContinental hotel is planned for Al Raha Beach, but it is not expected to open until 2015.

Hotel companies worldwide have experienced delays to their projects as developers suffered setbacks as finance dried up. Hotel occupancy was also hit by a downturn in global travel.

Last year, IHG revenue per available room, an important industry indicator, grew by 6.1 per cent in Europe, the Middle East and Africa as a whole. But in the Middle East alone, there was a 1 per cent drop.

“Egypt is an important market for us,” said Ms Sheppard. IHG has hotels in Cairo and in resort locations including Port Ghalib. “For us, what’s important is to look at as the market stabilises again how we can drive recovery back into the market. Egypt, just like many markets here, bounces back.” Within the GCC, Saudi Arabia is a particular focus for IHG. The company plans to launch its budget Holiday Inn Express brand there within the next couple of years.

“That could become a popular choice for emerging travellers,” says Ms Sheppard.

Ishraq Gulf Real Estate, which is majority-owned by Dubai International Capital, also has a franchise arrangement with IHG, as the exclusive developer of the brand in the GCC.

Sami al Ansari, the chief executive of the company, last year told The National that plans to build 20 Holiday Inn Express budget hotels in the Gulf for up to Dh3 billion have been pushed back. So far the brand has opened properties only in Dubai, although there are plans to open another in Bahrain this year.

Ms Sheppard said demand for such brands was only likely to grow. “The emergence that you are seeing here in terms of the low-cost carriers is creating another dynamic for mid-market travellers, encouraging people to travel more.”

rbundhun@thenational.ae

Moevenpick Hotels & Resorts, which has expanded aggressively in Dubai in the past year, says it is confident it will have a presence in Abu Dhabi despite slow construction progress.

“In Abu Dhabi we have experienced delays,” said Andreas Mattmueller, the chief operating officer of Moevenpick Hotels & Resorts, Middle East and Asia.

Moevenpick signed agreements to manage four five-star properties in Abu Dhabi, but all the projects are behind schedule. One hotel, which was planned to be located next to Ferrari World onYas Island, should have opened last year but construction has yet to begin.

“It should be open now,” said Mr Mattmueller. “We will see what’s going to happen.” The other hotels are planned for Reem Island, Al Raha Beach and Al Ain, and are some of the 13 agreements signed in the region for properties worth about US$1.5 billion (Dh5.5bn) in total.

The hotel on Reem Island is being built by Tamouh and the Al Ain property is being developed by Sorouh. Work on those buildings has started, but they are about three years from completion. The Yas Island and Al Raha properties are being developed by Aldar Properties.

“There are several hotels planned,” Mr Mattmueller said. “We are not the only ones having signed agreements. I am sure that they will look at the opportunities and stagger the openings of the hotels. We are very confident that sooner or later we will have a presence in Abu Dhabi.”

Jones Lang LaSalle said in a report yesterday that many hotel projects in Abu Dhabi were expected to be delayed given the market conditions.

With growth in supply outpacing demand, rates and occupancy levels last year came under extreme pressure.

“The supply pipeline is expected to nearly double over the next three years, although a large portion of this inventory may not materialise during this period,” the report stated. Moevenpick Hotels & Resorts, in which Saudi Arabia’s Kingdom Holding and Kingdom Hotel Investments has a 33.3 per cent stake, is based in Switzerland.

The company, which has opened three hotels in Dubai in the past year despite the economic downturn, says its other properties in the emirate are progressing, although they are behind schedule.

The Jumeirah Lake Towers residences are expected to open by May and the hotel component is expected to open in September. Two Moevenpick hotels are under development on the Palm Jumeirah, Oceana and the Royal Amwaj resort, which are being built by the Dubai-based developer Seven Tides.

Mr Mattmueller said the Royal Amwaj property should open before the end of the year. Seven Tides also owns the Moevenpick Deira, which opened last month and the Ibn Battuta Gate hotel, managed by Moevenpick, which opened last October. Moevenpick also opened a hotel at Jumeirah Beach Residence last year.

“Sometimes when you have four or five hotels under construction, you see a lot of cash outflow as an investor, and it’s normal you say times were tough over the past two years,” Mr Mattmueller said. “So it’s about focus and I think they [Seven Tides] did that extremely well to open the two hotels first and now some cash flow is coming in they’ll finish the other hotels,” said Mr Mattmueller. Since the onset of the economic downturn, a number of hotels planned in the UAE have been cancelled or postponed.

He believes there is still room for more hotels in Dubai. Last week Dubai benefited from the instability in the Mena region, which helped push occupancy levels above 90 per cent. Many properties were completely full.

“Last week hotels were fully booked in Dubai, so the demand came back again, albeit at lower rates,” said Mr Mattmueller. “The volume is back and I can see rates coming up again, probably not to the levels of pre-2008. There are a lot of conferences going on, there was the golf this week, you have the tennis coming up. There is always something on.”

Moevenpick has further projects under development in the region in Saudi Arabia, Syria and Oman.

rbundhun@thenational.ae