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Despite an increasing supply of prime residential property across Abu Dhabi, there is shortage of affordable accommodation, pushing some developers to consider mid-market projects in the coming years.
While many developers at Cityscape Abu Dhabi announced new projects that include prime property, there was a lack of announcements regarding affordable accommodation. The ninth edition of Cityscape Abu Dhabi was inaugurated by Shaikh Hazza Bin Zayed Al Nahyan, National Security Adviser and Deputy Chairman of Abu Dhabi Executive Council.
Mohammad Al Khadar, executive director of urban development and Estidama at the Urban Planning Council (UPC), said he expected more affordable units to come online in the market in the next few years.
“I think the market is realising the need for that segment. They sell quickly because the demand is really there,” he said.
In 2012, UPC obtained permission from the government to have a quota of 20 per cent of space of any master plan dedicated to mid-market housing. Today, 20 approved master plans have included the quota, which has become mandatory, with developers such as Aldar Properties, Mubadala, and Manazel, among others having applied it.
The quota is not applicable for individual projects, however.
Around 20 to 30 per cent of the units are already available on the market, with the rest expected to be launched in the coming few years.
“A lot of the units are on the islands (such as Yas Island) and some are on the mainland. I don’t think the plan for Abu Dhabi Island matches with affordable housing because the island is a hotspot. It’s like Manhattan, so it’s not even feasible for the developers,” Al Khadar told Gulf News on the sidelines of Cityscape.
According to UPC, affordable housing is targeted to individuals whose annual income ranges between Dh25,000 and Dh88,000.
Similarly, developers in Abu Dhabi agreed about the need to fill the gap in the mid-market segment.
Sameh Muhtadi, chief executive officer of Bloom Properties, an Abu Dhabi based developer, said there was a need for more project launches that meet the demand of lower income groups.
“There is always demand for affordable and mid-level housing. The problem is always how to make that formula financially feasible for private developers. The lack of interest (from developers) is not because there isn’t demand; it’s because the numbers haven’t made sense so far for both sides,” he told Gulf News.
The CEO also said that the issue was up to the government and providers of infrastructure, adding that subsidies could be used to ease the launch of such projects.
Discussing the overall performance of the Abu Dhabi real estate market, Muhtadi said there was growth.
“Oil prices may have had an indirect impact on property. Financial markets were affected [by falling oil prices] and whenever financial markets are affected, there is a natural caution.
The last couple of weeks the market has been recovering, and we see growth in tourism as well, so there are some positive signs that are influencing growth,” he said.
Meanwhile, Nader Al Hammadi, chairman of Tamouh Investments, the property developer behind most of Reem Island’s master plan, said that the company was in discussions with UPC on developing the mid-market segment.
“We’re trying to explore with UPC the options we have on this (affordable accommodation) but we have not gone beyond that stage. We have not made any decisions or designs or plans but we’re making an analysis on this gap to look into our options,” he said.
Al Hammadi added that Tamouh may potentially announce new mid-market projects in the future.
The show runs from April 21-23 at the Abu Dhabi National Exhibition Centre (Adnec) with participation from over 130 exhibitors, and is expected to welcome more than 17,000 visitors.
Source: Sarah Diaa, Staff Reporter, gulfnews.com