Business | Property
Abu Dhabi secondary property market booms
The overwhelming demand and limited supply in Abu Dhabi's property market drove prices at the secondary market to the roof, according to industry sources.
- By Ahmed A. Elewa, Senior Reporter
- Published: 23:49 August 10, 2008
Abu Dhabi: The overwhelming demand and limited supply in Abu Dhabi's property market drove prices at the secondary market to the roof, according to industry sources.
In new development areas, such as Aldar Properties' Al Raha Beach, prices of the units in the secondary market shot up by more than 100 per cent compared to the original price in less than two years.
"If the average price of a villa in Al Raha was Dh2 million two years ago, we find it today selling at more than Dh4 million, and this simply is the outcome of the market's imbalances, where strong demand is facing a very tight supply," commented Obaid Al Kaabi, managing director of United Group Holding. "The situation is worsened by the loose credit policies adopted by the banking system to finance real estate, where we find abundant liquidity from investors who are ready to pay any price for capturing the opportunity."
Price levels at Al Raha Beach area were also affected by the higher than average prices asked by Sorouh Real Estate for units at Al Ghadeer development there, where the 2800 square feet villa was sold at Dh4 million, compared a similar unit for Aldar which was priced at Dh2 million two years ago, and now selling at more than Dh4 million.
Nevertheless, most industry experts believe that the capital's secondary market is better off without tighter regulations at this stage, in contrast with Dubai's market, where the authorities are already preparing for the introduction of the final draft of regulations governing sales of purchased units there.
"In such tight market conditions, application of arbitrary regulations will do harm more than good, and although some claim that speculation is hurting the market, setting a limit on premiums in the secondary market will only yield negative effects," commented Saleh Al Nasrah, chairman of Al Shorfa Real Estate.
The development of the secondary market in the capital accelerated after the delivery of many units at Aldar's Al Raha Beach development, providing investors with the ability to lease the unit for financing the mortgage.
"The secondary market is a natural development, and with mortgages extending 20 or even 30 years, investors can be only tempted to step in," Al Kaabi explained.
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