1,000 homes to boost sluggish sales market
Abu Dhabi developers have started handing over more than 1,000 homes on Yas Island and Raha Beach, bulking up residential communities in the area.
Aldar Properties is delivering 551 homes in the Raha Beach development Al Zeina, one of the largest projects in the capital open to foreign buyers. And the Abu Dhabi Government has ordered the release of 488 villas on Yas Island to UAE nationals.
The Yas Island villas are part of agreements, announced at Cityscape Abu Dhabi in April, to develop 7,500 housing units for citizens in Abu Dhabi, Al Ain and the Western Region. More than 13,000 homes are to be built under the national housing programme.
Property agents hope the Raha Beach project, along with freehold developments being handed over on Reem Island, will re-energise a sluggish sales market. Delays in delivering projects have hampered the market, they say.
"Handing over and completing projects has to help breathe new life into the market," said Paul Maisfield, the general manager of Asteco Property Management in Abu Dhabi. "It's still a very, very small freehold market."
Agents expect Aldar to begin offering a lease-to-own deal in Al Zeina similar to the programme introduced this month by Sorouh Real Estate for Sky Tower on Reem Island.
Aldar has reportedly retained several hundred units in the development, which it is likely to add to the sales market.
"The introduction of rent-to-own schemes may boost demand" for projects in Abu Dhabi, Jones Lang LaSalle said in a report released this week, noting that it expected other developers to follow the Sorouh model.
Aldar officials were not available for comment.
The first phase of handovers in Al Zeina includes 551 apartments and villas. When completed later this year, Al Zeina will have a total of 952 apartments, 180 villas and retail space on 500 metres of beach. The development also includes a Waitrose supermarket, six swimming pools, six gyms and private boat moorings.
Al Zeina is the first beachfront freehold project in Abu Dhabiand offers the type of recreational facilities not found in most of the city's early freehold developments.
"It fills a gap in what Abu Dhabi lacks," said Paul Preston, the chief executive of Elsyian Real Estate.
The project will also widen the options available to Abu Dhabi renters.
Al Bandar, a neighbouring development opened last September, is "bucking the market trend", Asteco reported last week. Rents in the project increased "marginally" last quarter compared with the previous quarter, Asteco said. In contrast, rents fell by an average of 9 per cent in some other neighbourhoods, the property company said.
"There should be strong demand [for Al Zeina] from the rental market," Mr Preston said.
LLJ Property, an Abu Dhabi company, has a waiting list for rentals in Al Bandar, said Andrew Covill, the company's head of investment sales.
"Some of that waiting list will shift to Al Zeina," he said. The availability of units in the new development will also "accelerate" the migration of renters and owners from older buildings in the capital, he said.
But Al Zeina will enter a difficult sales market. More than 14,000 additional units should come on line in Abu Dhabi by the end of the year, according to Jones Lang LaSalle.
The number of transactions in recent months has been "minimal", the property consultancy said.
Prices for apartments in Al Zeina peaked at more than Dh2,200 (US$299) a square foot but are now probably closer to Dh1,200 a sq foot, Mr Preston said.
The market for Al Zeina will be complicated by owners looking to sell before handover to avoid making their final payments, he said.
The remaining buildings in the development will be delivered by September, Aldar said.
Aldar also plans this year to hand over units in nearby Al Muneera, a mixed-use development clustered around 14-storey apartment buildings.
Updated: July 19, 2011 04:00 AM