Off-plan sales driving Abu Dhabi housing market
Off-plan sales activity remained strong in Abu Dhabi’s housing market in the fourth quarter of 2017 as prices continue to show downward trend
Off-plan sales activity remained strong in Abu Dhabi’s housing market in the fourth quarter of 2017, though prices continued to slump overall, a report by property company Chestertons MENA finds.
The latest Observer: Abu Dhabi Q4 2017 report highlights a shift in demand to off-plan property, spurred by developer incentives to attract buyers.
The secondary market witnessed a 2% decline in apartment sales prices and 1% decline in villa sales prices, with GCC and Arab Nationals dominating sales in both the primary and secondary markets.
Abu Dhabi’s secondary market witnessed a 2% decline in apartment sales prices and a 1% decline in villa sales prices in Q4, while rents declined 2% and 1% in apartments and villas respectively.
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.
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 the fourth quarter, with the Al Raha Beach Area falling more than 4% from AED1,348 per sqft to AED1,282 per sqft.
Khalifa City registered an increase of almost 6%, with prices up from AED852 per sqft to AED895 per sqft.
The sector however will continue to struggle as a number of factors, including VAT, high vacancy rates, and sluggish economic growth, will put downward pressure on market rates in 2018.
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. “
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.