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Abu Dhabi Off-Plan Sales Activity Robust, While Secondary Market Remains Subdued Says Chestertons’ Q4 Report |
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GCC and other Arab Nationals remained the largest cohort of buyers in Q4, leading the shift in demand to off-plan property, spurred by developer incentivesOff-plan sales are driving the Abu Dhabi housing market as the Emirate continues to feel the pinch of reduced Government spending and sluggish economic growth, according to the latest Observer: Abu Dhabi Q4 2017 report from leading international property company Chestertons MENA. In Q4 2017, off-plan sales activity remained high as developers rolled out a number of incentives to attract buyers. However, the secondary market witnessed a 2% decline in apartment sales prices and 1% decline in villa sales prices – GCC and Arab Nationals dominated both markets. Ivana Gazivoda Vucinic, Head of Consulting and Research at Chestertons MENA, said: “Throughout 2017, we saw the effects of a number economic factors, including low oil prices, reduced Government spending, increased stock in the secondary market, a rising cost-of-living and redundancies. Sales prices, on average, decreased by 2% for apartments during the fourth quarter of the year, with some markets experiencing a more pronounced decline, such as Reem Island (5%), a result of waning demand. Conversely, Saadiyat Island registered the highest increase in apartment sales prices for the second consecutive quarter, at 5%, fuelled in part by the inauguration of the Louvre Abu Dhabi. On average, prices increased from AED1,362 per sqft to AED1,430 per sqft in Saadiyat Island, compared to Reem Island which declined from AED1,242 per sqft to AED1,184 per sqft. Average villa sales prices fell by 1% in Q4, with the Al Raha Beach Area falling more than 4% from AED1,348 per sqft to AED1,282 per sqft; while Khalifa City, in contrast, registered an increase of almost 6%, with prices up from AED 852 per sqft to AED 895 per sqft. The Emirate’s rental market demonstrated similar trends, with an overall decline in rental prices of 2% and 1% for apartments and villas respectively, echoing results from the previous quarter. Vucinic added: “Shrinking company housing allowances and excess rental supply exerted downward pressure on rental prices in the Emirate. Vacancies in some locations, such Al Raha Beach, surged over the quarter as residents downsized their accommodation or moved to more affordable communities. “ Downsizing did, however, bring some positive news for investors, as rents for one-bedroom apartments in Al Khalidiya rose by 7% bucking the wider market trend. In the villa market, Al Reef and Reem Island emerged as preferred locations. Al Reef was particularly notable due to the low rents on offer. For example, a typical three-bedroom villa could be rented for AED120,000 pa and on preferential leasing terms for some residents. Overall, the mix of high-performing areas changed in Q4, with Saadiyat Island being the best performing area in the apartment segment and Khalifa City showing positive trends in the villa segment. Mohammed Bin Zayed City registered the highest increase in villa rents at almost 2% again bucking the wider market trend. Vucinic also added: “There is a likelihood of positive economic sentiment emerging from ADNOC’s recent announcement to invest $109 billion in growth strategies. This plan could be the turning point for Abu Dhabi’s real estate sector as it could generate new jobs and therefore renewed demand for residential property.” The supply of new apartment and villa units peaked at around 1,500 and 250 respectively. In addition, announcements were made about Al Riyadh City, reserved solely for UAE Nationals and the 18-hectare waterfront development, Pixel Towers which will contribute a further 480 residential units in seven mixed-use towers, which are expected to come on to the market in 2018. |
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