Soaring demand and inflation are pushing developers to raise prices for off-plan apartments in Abu Dhabi so fast that the primary market is outpacing the resale market for similar flats by 25 per cent, property agents say. Secondary market prices would normally be expected to be higher than those offered by developers, as resellers take a profit. But a unit on Al Raha Beach development, for example, which costs Dh2,500 (US$681) per square foot from the developer today, could be picked up on the resale market at Dh1,950 per sq ft from someone who bought earlier on the same development, LLJ Properties said.
For units launched earlier at a cheaper price - Dh850 per sq ft last year in the case of Raha Beach - the reseller can still make a good profit by selling at Dh1,950 today. Because of spiralling prices for properties bought direct from developers, buyers can save up to a quarter by going to the resale market, the agency said. Inflation caused by rising construction costs and demand fuelled by speculation has recently pushed launch prices rapidly upwards.
"The gap between both markets is widening, since developers who launch their products are trying to catch up with rising construction costs," said Malake Fontaine, a property consultant at Sherwoods. Last year, the ratio between the two markets was the reverse: a unit on Al Raha Beach costing Dh800 per sq ft at launch in May or June of 2007 would sell on the secondary market for Dh950 - nearly 20 per cent more. This was partly because the Abu Dhabi market was starting up last year.