Abu Dhabi off-plan sales activity robust in Q4
ABU DHABI, February 10, 2018
Off-plan sales are driving the Abu Dhabi housing market as the emirate continues to feel the pinch of reduced government spending and sluggish economic growth, according to leading international property company Chestertons Mena.
The off-plan sales activity remained high as developers rolled out a number of incentives to attract buyers, stated Chesterton in the latest Observer: Abu Dhabi Q4 2017 report.
However, the secondary market witnessed a two per cent decline in apartment sales prices and one per cent decline in villa sales prices – GCC and Arab nationals dominated both markets, it added.
Ivana Gazivoda Vucinic, the head of consulting and research at Chestertons Mena, said: "Throughout 2017, we saw the effects of a number economic factors, including low oil prices, reduced government spending, increased stock in the secondary market, a rising cost-of-living and redundancies."
Sales prices, on average, decreased by two per cent for apartments during the fourth quarter of the year, with some markets experiencing a more pronounced decline, such as Reem Island (five per cent), a result of waning demand.
Conversely, Saadiyat Island registered the highest increase in apartment sales prices for the second consecutive quarter, at five per cent, fuelled in part by the inauguration of the Louvre Abu Dhabi.
On average, prices increased from Dh1,362 ($370.7) per sq ft to Dh1,430 per sq ft in Saadiyat Island, compared to Reem Island which declined from Dh1,242 per sq ft to Dh1,184 per sq ft.
Average villa sales prices fell by one per cent in Q4, with the Al Raha Beach Area falling more than four per cent from Dh1,348 per sq ft to Dh1,282 per sq ft; while Khalifa City, in contrast, registered an increase of almost 6 per cent, with prices up from Dh 852 per sq ft to Dh 895 per sq ft.
The emirate’s rental market demonstrated similar trends, with an overall decline in rental prices of two per cent and one per cent for apartments and villas respectively, echoing results from the previous quarter.
Vucinic pointed out that shrinking company housing allowances and excess rental supply exerted downward pressure on rental prices in the emirate.
"Vacancies in some locations, such as Al Raha Beach, surged over the quarter as residents downsized their accommodation or moved to more affordable communities," she noted.
"Downsizing did, however, bring some positive news for investors, as rents for one-bedroom apartments in Al Khalidiya rose by seven per cent bucking the wider market trend," she added.
In the villa market, Al Reef and Reem Island emerged as preferred locations. Al Reef was particularly notable due to the low rents on offer. For example, a typical three-bedroom villa could be rented for Dh120,000 per annum and on preferential leasing terms for some residents.
Overall, the mix of high-performing areas changed in Q4, with Saadiyat Island being the best performing area in the apartment segment and Khalifa City showing positive trends in the villa segment. Mohammed Bin Zayed City registered the highest increase in villa rents at almost two per cent again bucking the wider market trend.
Vucinic said: "There is a likelihood of positive economic sentiment emerging from Adnoc’s recent announcement to invest $109 billion in growth strategies. This plan could be the turning point for Abu Dhabi’s real estate sector as it could generate new jobs and therefore renewed demand for residential property."
The supply of new apartment and villa units peaked at around 1,500 and 250 respectively.
In addition, announcements were made about Al Riyadh City, reserved solely for UAE nationals and the 18-hectare waterfront development, Pixel Towers which will contribute a further 480 residential units in seven mixed-use towers, which are expected to come on to the market in 2018.-TradeArabia News Service
