x Abu Dhabi, UAESunday 21 January 2018

16,000 new homes for capital

Cityscape Abu Dhabi: The curtain rises today on the key event amid a maturing property market in the capital, where the themes are consolidation and creating more affordable housing.

A view across the financial district on Sowwah Island, which will house the new Abu Dhabi Securities Exchange.
A view across the financial district on Sowwah Island, which will house the new Abu Dhabi Securities Exchange.

Property sales in the capital are expected to rise sharply this year when more than 16,000 homes come on to the market and the Government issues Abu Dhabi's first detailed property regulations.

Although prices are expected to continue falling this year, thousands of homes are being handed over to buyers who booked them before the downturn in 2008.

"The market is coming to a stage where it is becoming more mature," said Sami Asad, the chief executive of the developer Aldar Properties. "We believe the delivery of these communities will increase sales this year."

Many of the projects announced in 2007 and 2008 are now being completed, which has led the property services company Jones Lang LaSalle to estimate that between 16,000 and 20,000 homes will come on to the Abu Dhabi market this year.

Aldar, which underwent a large recapitalisation and restructuring this year, is taking its first serious step back into property sales this week after more than two years of low activity. Prices have dropped by half in two years.

At the annual Cityscape conference, which begins today at the Abu Dhabi National Exhibition Centre, Aldar is showcasing homes in Al Raha Beach, Al Ward at Al Raha Gardens and Al Bateen Park. At Al Bateen, a development near the intersection of Hazza Bin Zayed and Khaleej Al Arabi streets, Aldar sold 38 villas and 10 penthouse apartments in the past week.

"We are testing the market," Mr Asad said. "These are controlled sales to end-users, not investors."

Much of Aldar's revenue has come from less-profitable lines of business since 2008, such as project management for the construction of the Masdar Institute of Science and Technology and building thousands of homes for the Government's housing programme for nationals.

The property market was showing signs that categories such as high-end homes were oversupplied while there was increasing demand for less-expensive homes, said Peter Wilding, the associate director of Mubadala Real Estate & Hospitality.

"We need to be cautious of future projects," Mr Wilding said. "We need to be flexible" with development plans.

Mubadala, one of the biggest developers in the Emirate, has narrowed its focus to the new central business district on Sowwah Island and a residential community, called Arzanah, near Zayed Sports City. Mubadala is looking at developing more retail projects.

Projects such as the MGM Grand hotel and others that were planned for Mina Zayed are being reviewed. It was important to cluster developments in areas where infrastructure had already been built, Mr Wilding said.

New regulations would also help to spur sales, he said.

"The service charge issue in Abu Dhabi has certainly scared some buyers," he said. "We understand that the Government is about to start regulating these charges, which is an important step."

Mubadala was revising some project plans to provide for less-lavish landscaping and maintenance contracts to reduce costs for buyers, Mr Wilding said.

The company has been looking for more development partners to buy land and build their own projects. A deal to sell land to Taiwan's Farglory Group in November last year was a sign that global property developers saw a bright future for Abu Dhabi, he said.

Asian companies were increasingly interested in investing in Abu Dhabi, he said.

Many of the homes coming to market this year were supposed to be delivered last year, but delays in certification have pushed back handover dates by months. About 3,000 units on Al Reem Island were originally scheduled for delivery last summer.

The supply of finished homes would help to increase sales because buyers preferred to see apartments or villas before making their final decisions, consultants said.

"Overall, investors remain cautious as they await stabilisation of rental prices," said Elaine Jones, the chief executive of the property services company Asteco.

* additional reporting Kevin Brass