I am grateful to Hamptons International- Property Management Company for this Guest Editorial which provides a well-researched update on the changing property scene in Abu Dhabi.
The lately finished Cityscape Abu Dhabi did not have that big an effect on the Abu Dhabi property market. The regional freehold market is presently sluggish with few transactions taking place. There are numerous enquiries concerning real estate in Al Reem Island and Al Reef Downtown, but only a small number of deals were brought to a close as banks’ estimations are significantly lower than discussed prices resulting in buyers having to wait as they cannot pay the high down-payments. According to research carried out, freehold values are still in decline across Abu Dhabi, with some projects being resold at their initial cost in the secondary market. Indications are that prices will carry on diminishing over the approaching summer months though at a much decreased pace than in Q1 of this year. The anticipation is that prices should level out by the last quarter of 2009 or by the beginning of next year.
In contrast to Dubai, Abu Dhabi letting costs have not fallen as drastically as those in its surrounding emirates. The cost of apartments for rent in the city remains high and has barely lessened in central areas. The major reason for this is a scarcity of finished flats in the capital. On the providing side, Al Raha Gardens has just joined the market. It has been noted that there is a strong upward trend in people moving to Dubai to take advantage of the rent that is a great deal cheaper. Emigrants from all over the world are settling in houses that are located in less central areas of the city – for instance, in villa complexes such as the Shahama and Al Raba area. Another reason for emigrants to settle down in Dubai is to benefit from the superior freehold developments currently taking place in the city.
Cityscape Abu Dhabi 2009 the International Real Estate Investment and Development event, observed a low number of participants which had been anticipated by numerous property experts and exhibitors given the current situation. Nonetheless several serious shareholders were present who were considering buying real estate of appropriate value and which was on the verge of being finished.
All in all, the Abu Dhabi real estate market continues to face an imbalance in demand and supply. Available stock this year will be restricted to the Arabic districts in Al Reef Villas, Al Raha Beach and Al Reem Island in early 2010. The biggest difficulty that buyers are presented is still the massive down-payment needed to finalise a transaction caused by the disparity between banks valuations and settled selling prices. This circumstance should hopefully turn around once the local market stabilises. In near future, a rise in letting prices will certainly be dampened given that significantly cheaper rents are obtainable in Dubai. It will therefore probably diminish in the long run as large supplies begin to join the market at some point in the middle of 2011 to 2012.
UAE Property Set for a Modest Recovery, Fujairah in Focus, 29 September 2009.
Dr Geoff Pound
Geoff can be contacted by email at geoffpound(at)gmail.com on Facebook and Twitter.
Image: “There are numerous enquiries concerning real estate in Al Reem Island.”
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