With Cityscape Abu Dhabi over for another year, what has emerged from the annual focus on the capital’s real estate sector? We know that major projects continue to be announced, hinting at bright long-term prospects despite some difficult economic conditions at present, but are the innovations on display in new developments being matched in the way this sector is organised?
Although the headlines generated by Cityscape Abu Dhabi tend to be dominated by extravagant high-end developments, there also needs to be sufficient affordable housing. As tighter economic conditions cause some people to scale back on their outgoings by moving to more affordable accommodation, it will help to know that good quality homes will be available in that sector as well.
Similarly, although some of the building designs in Abu Dhabi push the boundaries of what is achievable from an engineering perspective, the eventual tenants will often end up paying their rent via an archaic system that has not changed in decades: a series of postdated cheques. The perils of this are obvious, particularly with the law in this country criminalising bounced cheques, and this reliance on paper cheques is anomalous to our push towards being smart cities where most ordinary transactions are done electronically.
There is a further factor that justifies a reassessment. Although some tenants like to have the security of a long lease, particularly if they work for one of the major employers that pay the rent and then deduct it from the employee’s salary each month, the overall effect is to reduce the mobility of tenants. Factors such as the announcement this week of a 3 per cent fee levied on expatriate rents or economic prospects for a specific industry might prompt some people to opt to downgrade their accommodation costs, only to be tied in to a year-long agreement.
Similarly, having the employer – whether public or private sector – paying for an entire year’s rent also has an inhibiting effect on people changing jobs, which in turn affects the efficiency of the economy.
There are good reasons why this country’s leaders have put a priority on becoming smart cities, and those reasons ought to result in change to the way rent is paid.