Abu Dhabi’s real estate sales to pick up in second half of 2020
Government initiatives and incentive packages offered by developers are expected to boost the emirate's property sector
Abu Dhabi’s real estate sales are expected to increase during the second half of 2020 on the back of government initiatives and incentive packages offered by various developers, according to the latest report from Chestertons.
“While we expect Abu Dhabi to see falls in sales prices over the second half of 2020, generous developer incentives, such as extended post-handover payment plans, initial service charge waivers and discounted prices should serve to support transaction volumes,” Chris Hobden, head of strategic consultancy, Chestertons Mena, said.
Abu Dhabi, which has 6 per cent of the world's proven oil reserves, has introduced various measures to cushion the economy from the pandemic that has disrupted air travel and businesses across the world. In March, the Abu Dhabi government unveiled a number of measures to support businesses in the emirate, including the exemption of Tawtheeq real estate registration fees for commercial and industrial entities for the rest of the year.
The Central Bank of the UAE also relaxed lending limits for mortgages in the wake of the coronavirus pandemic as part of a series of measures that included a Dh256 billion stimulus injection into the economy.
Loan-to-value ratios were eased by 5 per cent, meaning the deposit required to buy a new home decreased to 20 per cent from 25 per cent for first-time expatriate buyers, and to 15 per cent from 20 per cent for Emiratis.
“Further initiatives, by both UAE and Abu Dhabi authorities, to support an economic recovery over 2021 bode well for the capital’s real estate market medium term," Mr Hobden said.
Developers have also introduced a range of incentives to boost sales, including rebates on off-plan purchases and waiving post-handover service charges for up to three years.
Aldar Properties, the emirate’s biggest listed developer, announced partnerships with several Abu Dhabi-based banks during the second quarter, providing buyers with access to discounted mortgage rates and reduced administrative fees.
Abu Dhabi saw moderate declines in residential values during the second quarter, with average apartment and villa prices falling 1.4 per cent and 1.3 per cent respectively quarter-on-quarter. On an annual basis, average apartment prices fell 5.3 per cent and villas declined by 4.8 per cent.
Rents also experienced a sharp rate of decline, with average rates dropping 2.2 per cent for apartments and 2 per cent for villas on a quarterly basis. On an annual basis, apartment rents fell 4.7 per cent on average and villa rents fell by 4.6 per cent.
More than 5,200 apartments are scheduled for completion during the second half of the year, with Al Maryah Island, Al Reem Island and Al Raha set to see the majority of new supply, according to the report. About 1,700 apartment units were completed during the second quarter.
“With Abu Dhabi’s economy forecast to rebound next year, we expect to see greater stability across residential prices and rents over 2021,” Mr Hobden said.
Updated: July 23, 2020 05:30 PM