Sorouh is offering a free rent period for flats on Reem Island, ratcheting up the competition for tenants in Abu Dhabi
Free rent for tenants as Sun Tower shines
Sorouh is offering prospective tenants free rent on flats on Reem Island, escalating the competition to attract renters in Abu Dhabi.
New tenants in the 65-storey Sun Tower can choose between six weeks' free rent or 10 per cent cash back.
The deal is available until the end of next month on the 75 flats remaining in the building.
Free rental deals are common in office projects but unprecedented on homes in Abu Dhabi, which was one of the most expensive residential markets as recently as three years ago.
"This is the first time I've heard of a residential offering [in Abu Dhabi] in the form of rent free," said Paul Maisfield, the general manager of Asteco's Abu Dhabi office.
The offer comes as several new residential developments around the island are looking for tenants.
Etihad Towers, the new five-tower development on the waterfront, started offering discounts last month for up to 10 per cent for tenants who sign long-term leases.
Other landlords are offering discounted rents, and including appliances and furniture in deals, as well as allowing renters to pay in four to six cheques instead of the customary one or two to cover a year's rent.
"People are looking for good value at the moment," said Paul Middleton, Sorouh's head of sales and marketing. "There is a chance to do something different."
The deal covers two to three-bedroom apartments with rates ranging from Dh150,000 (US$26,446) to Dh200,000 a year.
Sorouh's offer comes at a typically slow time of year for the leasing market, said Andrea Menown, the leasing manager for LLJ Property.
"This might encourage people to move sooner rather than later," Ms Menown said. "It is an opportunity in the run-up to the end of the year to get people moving more quickly."
Rents in Abu Dhabi have fallen more than 40 per cent since the peak in 2008, according to property firms. Most analysts expect rents to decline even further as more developments complete around the island.
Rental prices have been "quite stabilised the last couple of months, but I think it's the lull before the storm", Mr Maisfield said.
More than 50,000 new homes are scheduled for completion by the end of 2013, although some of those projects may be delayed, according to Jones Lang LaSalle, the property firm.
In addition to the Sun and Sky Towers and new projects on Raha Beach, the Etihad Towers and Al Ain Tower along the Corniche are opening to tenants. Nation Tower on the Corniche and the Marina Square towers on Reem Island are expected to open within a few weeks.
The new projects are competing with private owners who bought apartments and are now renting them.
The Sorouh deal allows the company to provide an incentive to tenants without lowering the listed rent.
"The last thing you want to do with any prestige product is discount," Mr Middleton said. "We don't think the right thing to do is to slash headline rates."
Sorouh was the first developer in the market to offer a rent-to-own scheme. The plan, launched in June, gives renters in Sun tower the option of converting 90 per cent of three years' rent into equity.
Aldar has also offered a rent-to-own scheme for new apartments on Raha Beach, hoping to entice long-term residents reluctant to commit to buying a flat.