Dubai: Abu Dhabi’s property market has some catching up to do in creating those mid-priced homes. As of now, only 18 per cent of its housing stock carry values of under Dh1,000 a square foot compared with the 50 per cent of such homes (existing and those being built) in Dubai, according to the latest data from Reidin-GCP.

And the gaps are apparent on other fronts, too — Abu Dhabi’s stock of freehold homes (including those defined as “long-term leasehold”) is still only 20 per cent of the overall housing market. That compares with the 57 per cent freehold base in Dubai as of now, the data finds.

But given the current weak demand for new homes, it is unlikely that the Abu Dhabi real estate market can plug these holes in the near term. With the exception of Aldar, other developers are not pushing ahead with new projects, believing they are better off waiting for the next upturn than get in now. And that by doing so they will not create additional supply that will further depress prices in the secondary market.

The numbers show the developer’s diffidence for new launches — as opposed to the 4,670 new homes launched in 2015, last year saw only 3,244 being released as off-plan in Abu Dhabi. (It was 3,272 units in 2014.) “A month-on-month price change signals that Dubai declines have tapered, signalling a bottoming out, whereas Abu Dhabi continues to fall,” states the report.

From a high of Dh1,429 a square foot in June 2014, average apartment values have dipped to Dh1,296 as of January 2017, a decline of 9.3 per cent. And the chances are there will be further dips before stabilising.

“Property values in Abu Dhabi do not appear to have bottomed out as yet,” said Sameer Lakhani, Managing Director of Global Capital Partners. “On the demand side of the equation, it is because Abu Dhabi has been more affected by the oil price decline.

“More importantly, in the freehold space, the upper income segment has dominated supply and consequently leading to a greater fall. The luxury end of the segment has suffered the brunt of the correction.

“In terms of participation by private sector developers, it is expected to rise. However, given the stage of the property development cycle that it is at, it appears as if the GRE (government-owned real estate) developers like Aldar will have to be at the forefront of development, including in the introduction of post-handover payment plans.”

Even mid-market is going to get a look-in. While announcing its 2016 financials, Aldar confirmed that mid-market housing has been assigned priority in its development plans for this year. That could include creating dedicated areas within the Yas and Reem Island master-developments for such housing options.

Even the stretches of land on the highway between Dubai and Abu Dhabi could be options as developers seek out new turfs to pitch up their mid-market/affordable housing. Interestingly, there were a few launches last year priced between Dh2 million to Dh4 million that were met with favourable responses. Now, it is up to the developers to push the price bar further down and go for a wider buyer base.

As such, Abu Dhabi’s property market needs a quick reset to get activity back. Unless there is an overnight improvement in the city’s high paying jobs market, those luxury homes will have fewer options to sell or lease in the coming months. According to market sources, the number of vacant homes is building up with each passing month, and that is hurting landlords even more than it did during the crash of 2009.

“Since the peak [in mid-2014], rents in Dubai’s [freehold areas] are down 8 per cent, whereas Abu Dhabi is down 10 per cent,” states the Reidin-GCP report. As with property values, “The month-on-month changes in both emirates reveals that Dubai trends have begun to bottoming out, whereas Abu Dhabi continues to decline.

“There has been some migratory effect that has been witnessed between the two emirates, suggesting that rental pressures may continue in Abu Dhabi.”