It’s off-plan in Abu Dhabi’s realty market

BUT IN SECONDARY SPACE, THERE IS LITTLE BUYING MATCHING SELLERS’ PRICE HOPES

Investors are putting up their homes into the rental pool, thus preferring to become “reluctant landlords” and earn something out their investments. |

Don’t look to Abu Dhabi’s secondary market for too much sales activity these days. Investors who bought in at the peak find there’s hardly any demand out there.

And even if there is, they are unlikely to get even the prices they initially bought it for.

“This gap in unrealised expectation vs market reality is causing the secondary sales market to see long transaction timelines and fewer concluded transactions,” states a new report from Core Savills on property market trends in Abu Dhabi during the first quarter.

“The secondary sales market continues to be muted as potential buyers remain on the sidelines waiting for the market to fall further.”

Opting to rent out

So much so, if they can’t sell now, these investors are putting up their homes into the rental pool, thus preferring to become “reluctant landlords” and earn something out their investments.

Not that the off-plan side of the market is more active. Strip out the periodic Aldar launches, and Abu Dhabi’s property market sees its developers focused on completing existing projects rather than taking on new ones.

In a best-case scenario, 9,200 new homes are scheduled for delivery this year, but given how completions and handovers have fared in recent years, the actual number could be “less than 5,000 units”, according to Core Savills.

An estimated 60 per cent of upcoming supply in the next three years will be within Reem and Yas islands.

Of the buying that is taking place, much of it is taking place in the mid-market category, where Aldar recently launched a twin-tower project — Reflection on Reem Island — with studios from Dh580,000.

“Cash-rich local and regional buyers/investors” are now looking to lock in at the current low entry prices.

“A wide variety of compact as well as better-build products that are now on offer give traditional investors the choice to expand their portfolio,” the report notes.

“However, because of this long-term horizon, expatriate movement to home ownership remains limited due to the current uncertainty surrounding the employment market and flexibility offered by the ongoing softened and attractive rental market.”

Good time to grow

For those buyers with the cash, now remains a good time to get in or add to their real estate portfolio.

Sales prices “continue to weaken” at most communities, which Core Savills estimates at 8 per cent on average in the last 12 months.

“Prices in various communities such as Al Bandar, Al Zeina and Saadiyat appeared to have improved slightly due to numerous handovers of quality off-plan projects such as Al Hadeel and Mamsha al Saadiyat. These handovers achieved steady absorption levels although older units continued to see sales prices soften.”

On the rental side, take-up rates are showing “steady” gains ... but this can be deceptive, says David Godchaux, CEO of Core Savills.