Abu Dhabi’s embattled property market is poised to experience a Dubai-like growth surge over the next three years as Aldar Properties starts to capitalise on pent-up demand for mid-income housing, a report claims.According to Reidin/Global Capital Partners, Aldar’s announcement earlier this month that it plans to focus on building mid-market homes this year signals a “paradigm shift” in the Abu Dhabi market.”Given the recent announcements of Aldar, we expect there to be a growth surge in the next three years as Aldar capitalises on mid-income market opportunities in order to balance the housing market in Abu Dhabi,” said report author Sameer Lakhani. “This would be similar to the growth that Emaar witnessed in its growth spurt phase in the first real estate cycle of 2004-08.”According to the report, currently 50 per cent of freehold homes being built in Dubai are valued at below Dh1,000 per square foot, while in Abu Dhabi they account for only 18 per cent.”With the imminent entry of Aldar into the mid-market segment, there is likely to be a proliferation of communities that will increase the volume and breadth of product on offer, heightening investor activity as a result,” Mr Lakhani said. “Activity by private sector developers is likely to increase as a result, similar to the experience in Dubai.”Reidin estimates that homes built by Emaar account for 7 per cent of the entire housing stock in Dubai, while in Abu Dhabi, Aldar developments account for 10 per cent of the city’s total housing stock.It adds that in Dubai freehold development accounts for 57 per cent of the entire housing supply while in Abu Dhabi it accounts for just 20 per cent.According to Reidin, house prices in Dubai fell 13 per cent between December 2014 and December 2016, while in Abu Dhabi prices fell just 9 per cent during the same period. However, the data company adds that house price declines in Dubai appear to be bottoming out, while in Abu Dhabi they continue to fall.The report comes at a particularly gloomy time for UAE developers. Last week the credit ratings agency Standard & Poor’s said that it expected house prices and rents in the UAE to continue to fall throughout 2017 because of the continued fallout from low oil prices and currency woes.”For 2017, we see no signs of market improvement for the UAE real estate sector, despite housing affordability improving from the current price environment,” S&P said. “The strength of the dollar is making the UAE increasingly expensive for tourists and low oil prices in 2016 have diminished purchasing power and weakened investor sentiment.”The ratings agency also pointed to the fall in the value of the UK pound as a major concern for the UAE property market. The currency has declined by 17 per cent against the US dollar in the past 12 months as the UK in June voted to leave the European Union.lbarnard@thenational.aeFollow The National’s Business section on Twitter
Source : thenational.ae
Read more…Aldar mid-market focus signals coming surge in Abu Dhabi property
