Abu Dhabi property prices expected to be flat for 2 years

[Lahore_Real_Estate]

Abu Dhabi: Abu Dhabi real estate prices will likely remain flat with a downside bias over at least the next two years due to a mismatch between higher property prices and what people can afford, lack of liquidity with the banks which restricts lending and better and more affordable options for buyers in Dubai, say property market experts.

"The Abu Dhabi realty market is certainly flattening, though some pockets on Abu Dhabi island will continue to demand premiums due to their prime location.

The developments and the pace of delivery on Reem Island properties and those on the Al Raha Beach will be closely watched by the investors and will impact the market, moving forward," Blair Hagkull, regional managing director for Jones Lang LaSalle, a global property advisory firm, told Gulf News in a telephone interview last week.

He added: "The Dubai market is becoming more affordable and this affordability is enabling investors to buy properties in the emirate, assuming that they can secure financing from the banks, which continues to be in a scarce supply."

Property prices in Abu Dhabi have been on a downward spiral after peaking around mid-2008.

For example, a two-bedroom villa in Al Reef project, which was selling at Dh1.9 million at the peak, now sells for Dh1.25 million. As well, apartments on Reem Island and Al Raha Beach that were selling for Dh1,700 per square foot are down to Dh1,300.

There are no off-plan sales at present, partly due to investor confidence and partly because developers do not wish to release stock when there's no end-user finance available.

However Elaine Jones, CEO of Asteco Property Management, said that looking ahead the realty market in Abu Dhabi is unlikely to correct further due to a limited supply of residential units.

"Abu Dhabi freehold market is more stable than other markets due to the control on supply which protect all properties already bought. The major freehold markets becoming available shortly for completion are Al Raha Beach and parts of Reem Island, notably Marina Square and Sun & Sky Tower," said Jones in a phone interview last week.

Comparable standard

"These are being keenly anticipated, as white collar workers will finally be able to lease or buy buildings of a comparable standard to that of Dubai. Abu Dhabi is aware of the importance of delivering quality real estate, with amenities," she added.

Sudhir Kumar, Managing Director of Realtors International said the Abu Dhabi property market was in decline during the global recession.

"Confidence is very low, liquidity very tight and mortgages are very difficult. There are distress sales and buyers are very difficult to get. However, these are all temporary phases the market is going through because of the changed economic scenario," said Kumar.

"Investors will ultimately flock as Abu Dhabi as it is guided by proper vision and planning," he added.

It's obvious that a majority of Abu Dhabi's real estate and infrastructure projects are still going ahead despite the global economic crisis.

Private developers and government entities are pumping billions of dirhams into Abu Dhabi to create an ultra-modern city conforming to global living standards.

With massive investments in the industrial, tourism, civil aviation and real estate sectors, Abu Dhabi city and its surrounding areas are all set to get a complete make-over by 2015.