Abu Dhabi Real Estate Investment Show Flops

The Abu Dhabi Real Estate and Investment Show has been hit hard by the global downturn. Exhibitors showcasing their latest projects said yesterday that they are finding buyers hard to come by. The sales staff just about outnumbered the visitors at the Abu Dhabi National Exhibition Center on the opening day.

“We are finding problems to find buyers for the projects we are showcasing here – Al Ghadeer and Arc Tower. It seems the buyers are waiting for the market to get stable,” an anonymous  sales executive of Sorouh said.

A sales executive for Corner Stone Real Estate, Majid Al Shafe’ei, who was trying to sell projects of Rakaa Real Estate – Dynasty and Falcon Crest on Reem Island on Shams Abu Dhabi – said he hadn’t been able to sell any units, late into the afternoon on the first day.

“It’s zero so far. But we are trying. The cash flow is not there. There’s no money with the banks to finance,” Al Shafe’ei said.

Developers seem un-willing to accept the new financial reality. Despite a dearth of sales, prices remain high. Both Sorouh and Hydra Properties said they are not dropping their prices and are quite able to weather the current financial crisis – apparently they do not need to sell anything  to make a living.

“We haven’t dropped our prices, nor are we giving any discounts,” said a Sorouh executive.

Hydra has made one minor ineffectual concession – they have broken the one-time, 10% down payment on off-plan property into three parts.

“The 10% down payment has been broken up into payments of 2.5%, 2.5% and 5%. Between the first and second payment, there’s a 30-day period, while the gap between the second and third payments is 90 days,” said a Hydra executive.

As the Dubai property market continues it’s inexorable slide into oblivion, questions are now being raised about Abu Dhabi’s sustainability, although the Abu Dhabi government seems committed to pumping in as much money as needed to prevent the banking system from collapsing completely.

Shortly after the show’s opening ceremony, Shaikh Sultan Bin Khalifa Al Nahyan, member of the Abu Dhabi Executive Council said, “There are plans to pump more liquidity into the market through the banks. There is a slowdown. The real estate sector is affected because of difficulty in getting finance. But in the next three months the banks will pump in more liquidity that will help stabilise the market.”

Much like Dubai, overbuilding in the luxury home sector at the expense of affordable housing further down the price scale, Abu Dhabi is becoming unbalanced.

No doubt, once the 125% low starter rate mortgages start becoming available again, things will start to pick up.