Dubai: The UAE’s real estate market may be softening, but Abu Dhabi continues to generate a high level of interest from investors, according to analysts.
Buyers are still snapping up properties in the country’s capital, particularly in developments with competitive offerings, ranging from discounts to investor-friendly payment terms.
The most sought-after are projects developing off-plan units. This trend was already evident in 2018 and could continue this year, which is expected to see contractors turn over more than 10,000 additional homes.
“Off-plan properties offered at attractive rates with flexible payment plans continued to generate interest with some developments achieving high demand levels,” noted Asteco in its Q4 2018 Abu Dhabi Real Estate Report.
Just this month, Aldar Properties saw a number of its plots, worth Dh1.6 billion, snapped up by buyers in less than 24 hours. That high level of interest generated by the firm’s Al Reemam project was deemed as a sign of improved investor sentiment.
“This market is starting to become mature and sophisticated, there’s positive sentiment,” said Aldar chief executive Talal Al Dhiyebi in a recent interview with Reuters, adding that the company will fully recognise the revenue and profit of its development over the course of the next two years or so.
The good news for homebuyers, as well as tenants, is that the market will likely continue to work in their favour, with the anticipated increase in property supply this year expected to continue putting pressure on prices.
“As more supply is expected to materialize in the coming year, residential vacancies are anticipated to increase further causing further rental declines,” said JLL in its report. “The softening market conditions have forced vendors to decrease asking prices to attract the reduced level of demand.”
Approximately 11,200 residential units are scheduled for completion this year. Most of these units are in the Investment Zones, including the Reem Island development, Al Raha Beach, Yas Island and Saadiyat Island, according to Asteco.
Sales prices of apartment units registered an average decline of nine per cent in 2018, with the highest decline recorded in Marina Square and Sun & Sky Towers on Al Reem Island. Sales prices for villas declined slightly by four per cent, with the most significant drop reported in Al Raha Gardens and Al Reef Villas.
Most recently, however, some villa landlords are becoming quite firm at the negotiating table. ValuStrat has analysed more than 5,400 unique rental listings for last year and found that as of December 2018, leasing rates registered a slight decline.
“On a quarterly basis, [rents] were stable in the second quarter and third quarter and saw a minor increase of 1.5 per cent in the fourth quarter,” Haider Tuaima, head of real estate research at ValuStrat, told Gulf News.
“This shows that most villa landlords during that period were no longer willing to list at lower asking prices, particularly in most sought-after locations, such as Khalifa City, Al Reef and Raha Gardens, as this comes at a time when only 927 villas were supplied during that year. It remains to be seen whether this trend will continue in 2019.”