As part of our Sunday Series, every week, we bring you a new expert advice column to make the most of your life in Abu Dhabi. This week, Alan Kaye, director of business development at District Real Estate, tells us about buying property in Dubai and Abu Dhabi and the developers who have set up shop in the UAE.
Looking back over the past year at the property market in Abu Dhabi, we have seen a continuation of a trend that started towards the end of 2015, when the price of oil plummeted.
Sales and rental prices have been declining since then to the point where they are now around 20 to 25 percent lower than at the peak.
Many companies have taken a cold hard look at their workforce and unfortunately there have been many redundancies, not only in oil and gas but also in ancillary industries.
Housing allowances have also been cut and this has resulted in many people being forced to move.
Dependant on circumstances, people have either downsized or been able to move into properties that have reduced in price.
This has resulted in quite a lively market and landlords have also been offering various incentives such as commission-free, multiple payments and free months.
At the end of 2016, the municipality re-introduced a five percent rent cap, which had the effect of slowing down the fall in prices. This was because real estate agents had been putting forward the proposal to landlords to accepting low offers as they would be able to increase the rent in following years.
Sales, particularly of ready properties, have slowed over the past year and both buyers and sellers have had to be realistic. There has likewise been a drop in selling prices of around 20 percent.
We sold a three-bedroom apartment at Saadiyat Beach Residence at the end of 2015 for AED 4.1m. A similar apartment has just been sold for AED 3.35m and this pattern has been repeated throughout the city.
The one positive area has been in the sale of off-plan properties and interestingly Dubai developers have also been targeting the Abu Dhabi market, to the extent that 23 percent of all Dubai off-plan sales are to residents of Abu Dhabi.
Aldar, in particular, has had very successful launches of projects on both Al Reem and Yas Islands – the benchmark being high quality at low prices.
Similar projects are planned by Aldar for 2018 and new developer Imkan has also just launched the Makers District on Reem Island, which promises a new concept in property developments, at similar low price points and with attractive payment plans.
We, at District Real Estate, are also experiencing increased demand from the top end of the rental market from CEOs and CFOs who have arrived in Abu Dhabi to either start up new companies or advance companies that are currently here. These companies have been attracted by the positive business environment nurtured by the Abu Dhabi government, which will eventually result in more people being hired as new businesses develop and grow.
Major projects such as the new Abu Dhabi Airport are also due to come on stream at the end of 2018, increasing the demand for staff and, in consequence, housing.
So to predict for the year ahead I think that we are now getting towards the bottom of the cycle and prices will plateau before beginning to slowly rise in the latter part of 2018 for both sales and leasing.
As always my advice if you are looking to buy, sell or lease a property is to contact a reliable, honest and trustworthy real estate company that is registered with the municipality, such as District Real Estate.
I wish you a happy, healthy and wealthy 2018.
Alan regularly answers your property questions in Abu Dhabi World. You can ask for some advice by sending an email to firstname.lastname@example.org. For more information, visit: districtuae.com