The downward price corrections witnessed in Q2 2019 in the Abu Dhabi real estate sector appear have to slowed in Q3, with average sales prices for apartments down 1% from the previous quarter and sales prices for villas showing no movement from Q2, according to an S&P report.
This suggests the market could be close to bottoming out, however, this will depend on the amount of supply coming onto the market in 2020.
One of the biggest challenges that has faced the Capital’s residential sales market is oversupply. With over 11,000 units expected to be delivered by the end of 2019, the market is likely to continue to remain soft for the rest of the year.
However, there is not a significant amount of new supply expected to be delivered next year which means there could be a better balance between supply and demand which will ultimately lead to a more stable market in the future.
The Government is supporting investment into the Capital’s real estate sector by way of the recently announced law, which will allow foreign nationals to own freehold property in designated investment zones; a privilege previously enjoyed only by UAE and Gulf Cooperation Council (GCC) nationals.
As has been the case in Dubai, Abu Dhabi developers understand they need to be more creative to attract buyers in the current competitive climate. This has manifested itself in the form of flexible payment plans. Aldar Properties recently launched attractive post-handover payment plans for six of its developments across Abu Dhabi, including Mamsha, Jawaher, Yas Acres, Mayan, Alghadeer, and Reflection.
Under the terms of each plan, investors will be able to buy villas, townhouses and apartments with no registration fees and payments spread over four to five years after handover, for up to 60 per cent of the development value.
Apartments: In contrast to the previous quarter, Saadiyat Island witnessed no price adjustment in Q3. Average apartment prices remained at AED 1,400 per sqft.
Al Reem Island and Al Ghadeer both witnessed modest price declines in Q3 with a 1% decrease from Q2 2019. Prices in Al Reem Island dropped from AED 975 per sqft in Q2 to AED 965 per sqft in Q3 and average apartment prices in Al Ghadeer dropped from AED 750 per sqft in Q2 to AED 740 per sqft in Q3.
Al Raha Beach and Al Reef apartments saw the second highest price adjustments, both decreasing by 2% over the previous quarter with prices declining from AED 1,300 per sqft to AED 1,280 per sqft and AED 814 per sqft to AED 797 per sqft respectively.
Villas: Price adjustments were witnessed at Al Reef and Al Ghadeer, which only dropped 1% from the previous quarter from AED 628 per sqft to AED 620 per sqft and AED 700 per sqft to AED 695 per sqft respectively. Prices within the established communities of Al Raha Beach Area, Khalifa City and Al Raha Gardens remained stable at AED 1,160 per sqft, AED 872 per sqft and AED 700 per sqft respectively.
Also published on Medium.