The Housing Headache
Ben Crompton analyses the staff accommodation options in Abu Dhabi
The ins and outs of staff accommodation in Abu Dhabi
Hiring the staff for even a relatively small hotel can be a nightmare, but once you have the right people to sign on the dotted line then your headaches really begin: visas, transport, training and where exactly are they going to sleep?
The biggest problem with staff accommodation has always been that to keep transport costs down hotels need to house their staff in one or adjacent locations.
Just going out into the market and hoping to find accommodation for 100 to 300 staff in almost the same place would not be practical, as the chances of finding the required number of units is one building would be slim.
The only time you’re likely to get a building or adjacent buildings which have the kind of space in them to house hotel numbers are if they’re brand new, having issues with occupancy levels or have just been refurbished, and are therefore empty.
For years in Abu Dhabi this seemingly thorny problem was relatively straight-forward. Khalifa A (named after the current Ruler of Abu Dhabi and President of the UAE HH Sheikh Khalifa bin Zayed Al Nahyan) was writ large in the minds of most housing managers.
The area is close to the city, has relatively cheap rental prices and new villas are being built there all the time. These villas could then be subdivided as much or as little as you liked, at a relatively low cost.
That gave control over room sizes and allowed hotels to put people on similar shift patterns in the same place to minimise transport costs. Entire compounds or groups of compounds were rented out by hotels for all their staff.
Sadly the Khalifa A dream is over. The Municipality has designated Khalifa A a family area and is clamping down hard on villas that have been subdivided without the correct permissions.
Just recently a friend of mine, living in an illegally subdivided villa, had his door literally broken down by the Municipality, who stormed in, turned off his water and electricity, and told him he had to move out (he had paid a year’s rent in advance only three months previously and is now locked in a legal dispute to get this rent back).
The Municipality has given ultimatums to all the hotels housing their staff in Khalifa A, stating that they need to move out. These deadlines, originally set for the beginning of this year, have been extended but are now looming large on the horizon.
Widen your options
So where to go now? The other option which was always popular was Mohammed Bin Zayed City, also known as MBZ (named after the current Crown Prince of Abu Dhabi HH General Sheikh Mohammed bin Zayed Al Nahyan).
This area is located to the south of Abu Dhabi alongside the Mussafah Industrial Zone and is home to a huge amount of low cost housing. The difficulty that hotels face in this area is its distance from Abu Dhabi Island and the fact that after the housing market took a severe turn for the worse in 2010, a lot of building projects in MBZ were mothballed.
This has led to a severe shortage of the new or recently refurbished housing required by hotels, which has only been exacerbated by the migration from Khalifa A of all the big companies who were housing their staff there, hotels included.
So what is Plan B? Plan B, oddly enough, is Abu Dhabi City itself. Several things are happening in the apartments market that are making coming back to Abu Dhabi Island cost effective again.
The first reason is a general oversupply of apartments. Reem Island and the Bostan, Danat, ADNEC and Rowdhatt developments are bringing vast numbers of apartments onto the market in Abu Dhabi which are putting huge pressure on rental prices.
In particular, the release of the Gate Towers, Mangrove Place and several other towers on Reem in Q2 and Q3 this year, and the current low occupancy levels of Marina Square (about 65%) will also lower rents across Abu Dhabi.
A good example is the fact that Crompton Partners recently reached an agreement with a hotel to house its staff on Reem Island in a brand new building with a pool, gym and sweeping views of the Arabian Gulf.
The second is a specific oversupply of better quality apartments. Abu Dhabi has had a recent obsession with lavish housing which has led to a flight to quality and consequential dip in the cost of lower end and slightly older units, with very little low cost housing having been built recently as developers continue to push for marquee and signature properties.
A third reason, strangely enough, is parking. The increase in Abu Dhabi’s population has meant that free public parking has been all but swallowed up. New regulations require buildings to have their own underground parking but this doesn’t apply to the older buildings built with no parking whatsoever. Hotel staff are among the few occupants that don’t need parking and who can occupy these otherwise almost un-rentable buildings.
The result is that older and lower grade tower blocks have become very affordable for hotel housing, which also cuts down on transport costs by being close to the hotel facility itself.
The difficulty is still locating one of these buildings in a renovation phase so that it is empty to house the bulk of your staff, or snapping up a newer, higher quality building that is having issues with its occupancy levels (Crompton Partners managed to negotiate an Al Reem Island property down from AED 115,000 per two bed unit to AED 95,000 per unit due to low occupancy and a need by the landlord to rent).
Abu Dhabi Island is the new home for hotel staff. Your staff will like being closer to town and it keeps accommodation and transport costs down. Get in early, negotiate hard, keep your options open and use an experienced partner.
About the Author:
Ben Crompton is a Cambridge law graduate, former corporate lawyer and runs the Abu Dhabi office of Crompton Partners Estate Agents LLC. His brother Barnaby runs the Dubai branch. Visit www.cpestateagents.com for details.