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The impact of oil prices on sales of residential property is being offset by rising rental rates in Abu Dhabi, according to Christopher Taylor, chief executive officer of Abu Dhabi Finance, a mortgage provider.
In an interview with Gulf News, Taylor said that the removal of the rental cap in November 2013 pushed many residents to start purchasing property rather than renting, boosting the sales segment, and balancing out the impact from falling oil prices.
“In Abu Dhabi, we’ve seen a pretty strong start to the first quarter of 2015 in terms of new applications for mortgages. We’re about 20 per cent up on the same quarter in 2014,” he said.
Taylor added that the new trend this year, however, was that buyers are starting to get mortgages before purchasing property, whereas in earlier years, buyers tended to find property before getting the mortgage.
The CEO was speaking on the sidelines of Cityscape Abu Dhabi, which is being held until April 23 at the Abu Dhabi National Exhibition Centre (Adnec).
“It’s at least 30 or 40 per cent cheaper to have a mortgage than it is to pay rent, and that is fundamentally what is keeping the market in Abu Dhabi pretty healthy.
Rental prices are going up a little bit faster than sales prices, and ultimately, you have people that just don’t want to rent anymore, and that continues year-on-year,” he said.
Taylor said he expected to see growth in the sales market, with more mortgage transactions taking place at Abu Dhabi Finance.
“We expect to see a solid year. We would be looking for our overall volume of business to be 10 to 20 per cent up on last year, and I think that’s in line with what most of the banks are predicting in terms of their balance sheets,” he said.
Discussing access to mortgage, Taylor said that positive performance from the banking sector is being reflected on property buyers as banks have higher liquidity, and hence, stronger offering on mortgages.
As for the overall real estate sector, the CEO said he expected relative stability throughout the year.
“We’ve seen in the last six months stabilisation. We’re moving to a period of single digit growth, hopefully in terms of both rental and sales prices. I think that’s a good thing as a lender. We don’t like a lot of volatility because it either attracts the wrong kind of buyer or it scares people off,” he said.
Source: Sarah Diaa, Staff Reporter, gulfnews.com