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MPM Properties, the analytical unit of the ADIB bank, has published its Q2 summarizing report: sales prices for residential real estate in Abu Dhabi declined 13% from their peak in the third quarter of 2014.
Quarter-on-quarter decline in sales prices in the capital's real estate sector was not as significant and amounted to only 1%, while year-on-year the difference is more pronounced. The only exception was for the Saadiyat Beach Residence residential complex, where prices rose 8% year-on-year compared with their peak in 2013.
Paul Mansfield, MPM Properties CEO, noted that despite the decline, off-plan property in the capital of the UAE continues to drive investor’s demand and increase sales volumes, especially by such major developers as Aldar and Bloom Properties.
According to Mansfield, more investors can be attracted to primary real estate market of Abu Dhabi, if the requirements for the minimum down payment will be lowered. Now banks issuing mortgages in Abu Dhabi require the buyer to pay at least 25% of the off-plan property value.
In addition, according to MPM Properties, in the first half of 2015 an increase in the number of direct sales and long-term lease to real estate corporate buyers and tenants was noted in Abu Dhabi real estate market. Free economic zones continue to attract new investors, and gross residential yields in the residential sector have stabilized at a level of 6.5 - 7.5%.
However, only 2397 units will be handed over in 2015 in Abu Dhabi, which will increase the existing housing stock by 2.9%, whereas the previous 5 years average increase in the housing stock amounted to at least 5%. This year, this percentage is unlikely to be achieved, MPM Properties say, so the lack of supply will continue to be felt, and it can certainly a bit slow down a decline in prices due to high demand.
