Abu Dhabi is shifting to affordable luxury housing
Developer and buyer mismatch to be addressed at UAE capital’s leading real estate event
An emerging trend in Abu Dhabi’s residential market is seeing affordable housing to solve a prevailing disconnect between developer preferences and buyer demand.
This has been revealed by the exhibitors at Cityscape Abu Dhabi, ahead of the trade show from April 16-18.
The trend, say industry experts at Cityscape Abu Dhabi, could see the capital’s real estate landscape veer away from ultra-luxurious vanity projects to more affordable homes that are stamped by build quality.
Global real estate services provider Savills says the Abu Dhabi scenario is not unique to the region and could be a weathervane of things to come.
“There are currently some challenges in the real estate market that are not limited to the region and should not be looked at in isolation. Irrespective of the overall sentiments, projects that offer the right product at the right price are finding favour with the buyers. This highlights that there is sustained demand for good quality real estate,” said Steven Morgan, CEO Savills Middle East.
“The real estate market is still facing a mismatch of demand and supply. Developers focus on luxurious projects and the numbers of such accommodation is steadily increasing when the real demand is shifting towards affordable housing.”
Dubai-based Binghatti Holding said that developers could be missing a trick and losing out on increasing demand for more affordable yet quality accommodation if they fail to adapt.
“The Abu Dhabi real estate market has gained a lot of attraction from investors interested in low price inventory due to higher expected yields and flexible payment plans offered by developers, so it is a ‘buyers’ market,” said Muhammad Binghatti, CEO and head of architecture, Binghatti Developers.
Both Savills and Binghatti are optimistic of the Abu Dhabi market and point to UAE government initiatives on regulatory changes, increasing federal spend and implementation of the 10-year visa as measures likely to boost the real estate sector.
“The multitude of government initiatives will complement the UAE Vision 2021 and beyond and support long-term economic growth, which will act as a catalyst to the real estate dynamics going forward,” added Morgan.
Savills believes Abu Dhabi could represent a safer investor haven as it is set to become the second largest city in the Middle East after Riyadh in terms of GDP by 2035.
In addition, developers and landlords are now offering generous payment plans and schemes that include lower initial deposits, longer payment plans initiatives and rent-to-own agreements.
“As per Oxford Economics, Abu Dhabi is set to achieve an average annual GDP growth rate of above 3 per cent. In addition, factors such as modern infrastructure, a strong social/cultural fabric and early adoption of new technology, makes Abu Dhabi a striking focal point for investors,” added Morgan.
Binghatti says market incentives are now working in favour of buyers. “There are a lot of good payment plan options available for the consumer, enabling the customer to spread their costs. The banking sector also aims to give good mortgage rates to customers,” he said.
“The government’s new Dh50 billion development plan has positive implications which are impacting the real estate market with a reduction in costs for real estate developers as well as public–private partnerships across the region. The goal of this plan is to position Abu Dhabi as a hub for domestic and international investors.”