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Dubai: Developers in Abu Dhabi may be gearing up for the kind of off-plan launches that Dubai had seen a lot of in the last 12 months. They have a good place to start as Cityscape Abu Dhabi 2014 opens this week in the capital.
It was at last October’s Cityscape in Dubai that the off-plan project pipeline finally opened up after a five-year hiatus. In Abu Dhabi, developers will be looking for a bit of help from the authorities, in particular by being able to sell properties in special investment zones as full freehold for nationalities other that UAE and GCC citizens. It would mark a significant upgrade from the long-term leasehold rights available now.
“Abu Dhabi has been reviewing the economic environment for investments and within this activity there could be one on freehold titles to projects in select investment zones,” said Matthew Dadd, Associate Director at Knight Frank. “There is a certain lack of choice in locations and in the type of properties compared to what an investor can access in Dubai’s realty, and that’s going to change.”
Recently, Aldar Properties became the first developer entitled to offer the full freehold option to investors in its communities. The market is now waiting to see whether the same status will be offered to other developers as well.
One such developer, Hydra Properties, confirmed that it would be interested in approaching the authorities for freehold rights on its project. “As a management, we always aspire to maximise the value for all our investors,” said Mohammad Al Habech, chief commercial officer.
At its Hydra Avenue project, for instance, freehold is available to GCC nationals and 99-year leasehold for expats. “We have seen a heavy migration toward new developments from the mainland and this has been enhanced by the change in government regulations and reflected in the substantial increase in prices over the last year,” said Al Habech, who believes developers still need to maintain extreme caution on off-plan launches.
“Developers are planning new releases but remain wary about on-hold projects; this is in order not to oversupply the market despite the positive market sentiment.”
Abu Dhabi’s property market is at the tipping point where more of its resident base — the affluent ones in particular — can be convinced to buy rather than remain tenants in rented properties. The emirate’s rental values have already shot up, and quite appreciably too within a relatively short span.
“There continues to be an imbalance between demand and supply which is also keeping prices on an upward curve,” said Simon Townsend, regional business development manager at DTZ, the consultancy. “The pressure on Abu Dhabi’s rental market has also shown that investors can generate an above-market return on their investments in mid-range developments.
“There is strong activity at mid-range developments, including Reef Downtown where significant demand is led by both owner-occupiers as well as investors. It is reasonable to suggest that the market is waiting with interest to see how new off-plan launches will compliment existing freehold choices as well as demonstrate the strength of current demand.”
Al Reem Island
Already a bustling “mini-city” with its signature high-rises and a growing resident base, Al Reem Island could still be a top-drawer attraction for prospective investor-developers.
“Plots are still available and there are some investors with stalled projects who are seeking joint ventures or strategic investors to re-launch construction,” said Robin Teh, country manager at Chesterton International. He reckons that a plot there is in the range of Dh200-260 per square foot of built-up area.
“I think that by and large investors are still waiting for a definite sighting of an upturn in end-user buyer demand for properties in Abu Dhabi. The transitioning from being a rental led market to one that combines both elements is happening slower than in Dubai.”
Source: Manoj Nair, Associate Editor, gulfnews.com