Discounts key to home buying
—The 100 plus developers ABU DHABI participating in the 12th edition of Cityscape Abu Dhabi are offering various incentives for buyers to purchase property at the event. This is in the form of slightly discounted rates, post-handover payment plans and lower upfront payment offers. With sales being permitted on the show floor, developers hope this will help reinvigorate the Abu Dhabi property market which continues to see price and rent declines owing to increasing supply.
“As the market is currently buyer-friendly, we can expect lots of incentives and discounts to be offered. In addition to lower prices per square feet, 2 other major forms of incentives are likely. Firstly, post handover payment terms — with smaller down payments required to secure off-plan units. And secondly, developers are likely to pay purchasers’ legal and transaction costs,” says Peter Stebbings, head of JLL Abu Dhabi office.
The Abu Dhabi market typically lags Dubai by 12 to 18 months. With the market still declining in Dubai, price and rent declines are likely to continue in Abu Dhabi for the rest of
As the market is currently buyer-friendly, we can expect lots of incentives and discounts to be offered Peter Stebbings, Head of JLL Abu Dhabi office
The mid-range market is slow while buyers adopt a sit-and-wait policy Edward Carnegy, Director — head of Abu Dhabi office, Cluttons
Affordable housing options have grown in Abu Dhabi but there aren’t many options yet for those in the mid-income category or below, a real estate expert said.
Real estate services company Colliers International’s director of development solutions, healthcare, education and PPP Mansoor Ahmed said there is a new normal in the market.
Giving a holistic view about trends, Ahmed said there has been a big change in Abu Dhabi. “Some 15 years ago, Abu Dhabi Corniche and malls were the only attractions. Now, there’s a New Abu Dhabi, which has transformed into a lifestyle city to live in,” said Ahmed.
“There are museums, concerts, new projects, water parks and Yas Marina, etc. Then, there is worldclass healthcare and education. All these aspects are needed to attract families to live in any cities.”
Giving various examples of what is affordability, he said: “In 2014, of the total housing units in Abu Dhabi, only 9 per cent of property available in freehold areas cost less than Dh11,000 per sqm. Then with change of laws, 20 per cent of units were made affordable in new buildings. As of now, 15 per cent of housing is affordable in Abu Dhabi. This is a big change from the 9 per cent in 2014.”
Highlighting the factors which have led to this change, he said: “The per square metre price has gone down, the overall profile of people looking for affordable housing has risen, unit size is becoming more smaller with lesser sales price.” “Let’s talk about areas to rent for those with salary of Dh15,000. Those people can look at Tourist Club Area, Al Markaziyah and Al Reef. We have very less options available for people earning up to Dh15,000. When we talk about those with Dh35,000, there are few more options.”
Since 2014, rents have dropped by 10 to 30 per cent.
“Rents have, however, gone down in certain areas only.” This phenomenon, Ahmed said, is mainly because of new affordable housing and availability of new properties in freehold areas. “People have moved from old to freehold areas. This has put pressure on those areas. Parking is also one issue.”
He said with the stable demandsupply ratio, rents will not fall further. “Lot of supply is coming but the changes in rents will not be across the board.”
Talking about average yields, he said: “Studios and one-bedrooms are still giving good returns. So, affordable housing and smaller units are a good investment with 5 to 7 per cent returns.”
Smaller units, lower disposable but stable income, requirements of lower cash deposits, cheaper mortgage, higher yield — all these factors will lead to more demand for affordable housings. “It is a buyer’s market but those who invest for long will have a stable yield of 6 to 8 per cent,” he added.