Getting the best from staff housing budgets

The expat package is one of the main attractions for employees of big international companies considering working overseas. It's also one of the biggest costs — but does it need to be?

The requirement to provide pastoral care — school fees, flights, health care, relocation costs, etc. — makes bringing in expats an pricey business for companies operating here.

Cost of housing

Most expensive of all is housing those workers and their families, and it appears that many companies are still paying far more than they need to for good quality accommodation.

However there are opportunities for savings to be made in accommodation portfolios across Abu Dhabi city this year, as residential rents continue to fall. In the emirate, the residential market is in a period of rapid change.

There are plenty of new residential projects, shiny new towers and villa compounds, plus the expansion of other master-planned communities. However, there are also some serious ongoing problems with infrastructure, meaning that what you see is not necessarily what you get.

Sensitive issue

Staff accommodation is a sensitive issue for employers looking at high rental costs and for newly arrived employees, already feeling vulnerable in a new environment and culture.

On occasion it's not usual for new arrivals to the UAE to be taken advantage of by being shown and pushed into less desirable or overpriced stock.

When a new employee arrives they need a professional agent they can trust, with a good knowledge of the market and an understanding of what the client wants from a new home.

It needs to be the right fit for that person's needs, squeezing the best value out of a housing allowance and ensuring that the tenant doesn't later feel cheated because they were inexperienced or naïve.

Volume lease villas

Working with HR departments to volume lease a cluster of villas or apartments in one development is a mutually beneficial approach, as both parties are able to realise savings of between 10 to 15 per cent on quoting market rental levels when taking multi-unit leases.

The advantage of this is three-fold; the landlord gets one corporate tenant and guaranteed rental commitment with minimum effort; the company gets a better rental deal; and the tenant gets higher quality accommodation than they could have afforded in the open market, as well as moving straight into a solid support network of fellow employees.

In Abu Dhabi residential rentals are still falling in most areas. Landlords are becoming much more competitive and offering negotiable rents and incentives to attract occupiers to their new developments.

For example, they are realising the importance of providing high quality facilities — including pools, gyms, and landscaped garden areas — for those seeking the sunshine lifestyle.

The message is that, where companies hold a portfolio of leased property, they must ensure that they are paying up-to-date market rents — especially where the portfolio is in an area of rapid rental declines. Failing to assertively renegotiate leases at the end of the term can be a costly mistake.

Critical eye

They key to a successful relocation, is to examine your portfolio with a critical eye on best value.

The new districts of Al Reem, Al Raha or Khalifa City offer good quality expat lifestyles at substantially reduced cost.

The Abu Dhabi residential market is changing very quickly.

To make the most of those opportunities now, companies need to move quickly and exploit a market which is moving their way.

The writer is associate director at Cluttons Abu Dhabi.