Abu Dhabi Property Experiences Summer of Growth

The Abu Dhabi property market has witnessed a considerable improvement in buyer interest during the summer of 2009 compared to the beginning of the year. A healthy local stock market and the continued abundance of employment opportunities in the Emirates’ capital city are just two of the reasons for this resurgent confidence from long-term property investors in particular. An international real estate agency noted that high value transactions in the Al Reem Island and Al Raha Beach developments were a positive indication about recent investor trends, highlighting more reasonable asking prices as a lure for cash rich buyers.

Another reason for the improvement in local property market conditions is the willingness of banks to approve mortgages- a vastly different picture from the recession-wary reluctance of late 2008. Expatriates working in government institutions, for example, have been offered 85% to 90% pre-approved mortgages for properties developed by Aldar and Sorouh. Again, Al Reem Villas, Al Reem Island and Al Raha Beach developments have witnessed up to a 35% drop in apartment prices, increasing their affordability and therefore demand from buyers. Overall, the first half of 2009 has witnessed a broad trend of 4% to 5% price decrease for property in Abu Dhabi.

Abu Dhabi Real Estate

Sorouh, one of Abu Dhabi’s major property developers, has offered reduced prices and rescheduled payment plans for existing buyers on their Gate Towers project in Shams Abu Dhabi, and are focusing their construction work on the Sun and Sky Towers on Al Reem Island, scheduled for completion in early 2010. Again conforming to a trend of lowering prices to increase buyer demand, it also bodes well for the Abu Dhabi property rental market, which had been subject to something of a contracted supply during the first half of 2009. However, two trends in the last six months have contributed to the situation around apartments for rent in Abu Dhabi; firstly, expatriates leaving the Emirate on account of job loss, thereby vacating their apartments and houses, and secondly, internal migration to Dubai where the rent is considerably cheaper than Abu Dhabi real estate. Further healthy competition for tenants has been provided by relatively cheaper rents located on the outskirts of the main city, such as Al Raha Gardens and Khalifa City. With cheaper villas and apartments for rent, for example a 3 bedroom villa costs less than a 2 bedroom apartment in the city, landlords within Abu Dhabi have begun to pick up the trend and offer more competitive rental rates for their properties.