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Tue 9 Mar 2010 02:50 PM

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Abu Dhabi property market at 'standstill'

Landmark Advisory says transactions remain at low levels in first two months of 2010.

Abu Dhabi property market at 'standstill'
PROPERTY MARKET: Abu Dhabis real estate market is seen at a standstill, according to a new report. (Getty Images)

Abu Dhabi's real estate market has reached a standstill with transactions at low levels in January and February, Landmark Advisory said on Tuesday.

Its latest sales guide focusing on the UAE capital forecast that property prices and transactions were not likely to increase on the back of recent mortgage rate cuts and the delivery of new units which are due to take place at the end of the second quarter.

Landmark Advisory said the limited transaction activity observed during the end of 2009 continued in the first two months of 2010.

“The market has reached a standstill due to the ongoing postponement of delivery dates, especially for projects like Al Bandar (Q309) and Marina Square (Q309),” said Jesse Downs, director of Research & Advisory Services, Landmark Advisory.

“This trend extends to Al Reef Villas, where the slow handover process is weakening investor confidence.”

Transactional prices in the capital have experienced only marginal declines of up to four percent, she added, as demand levels decreased and sellers become increasingly competitive.

Commenting on the recent announcement that the government plans to reduce the cost of home loans in the capital, Downs added: “While these changes are expected to stimulate demand, the improvement will be moderate in absolute terms.

"We do not expect the volume of transactions to increase significantly in the near future, even for close-to -completion developments. Buyers are now waiting for distressed sales, which are expected to materialise closer to handover, when the largest payment plan installment is due."

Heather Wipperman-Amij, CEO of real estate advisory firm Investment Boutique, last month said that residential property prices in Abu Dhabi were unlikely to increase until at least 2012.

The CEO said that 2010 would be characterised by continued delays in construction activity and the handover of projects.

Although Dubai has suffered more from this phenomenon, the executive predicted that Abu Dhabi would not be exempted.

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sunil 10 years ago

In my opinion anyone with risk appetite will be laughing all the way to the bank, when they invest in the capital now.I am sure people will have difference of opinion.Bring em on

Paul King 10 years ago

We are still in the initial phase of a certain decade long depression. The mistakes and gambles of a 20 year bubble have to be corrected, paid down or defaulted on. Don't bet on the property circus to start performing anytime soon!

Dan 10 years ago

@ sunil I think people have laughed enough for now by investing in Dubai property. Until UAE introduces adequate laws for real state and solves the visa issue, there will be very little investment for now. They also got to stop the speculators and fly by developers who hurt Dubai’s reputation by swindling some investors. When that is done I will be the first one to buy a house in Dubai. I really love that city :)

raj 10 years ago

Abu dhabi is a totally different ball game compared to Dubai. Freehold construction has been carefully planned and restricted to limited supply. The developers are backed by the Auh government who are flushed with cash and therefore one should not see unfulfilled promises. Abu Dhabi as a city is just awakening and one can see and hear about it. An emirate which rarely appeared in the local papers is now everywhere locally and internationally. They are cresting headlines, jobs and a lot of opportunities. One should seize this and take advantage. I predict a lot of wealth generation from the ‘emerging’ Abu Dhabi. A medium to long term investor can expect to make solid real returns from the Auh property market in the coming years Of course the global recession along with the inevitable consequences of the Dubai debacle will take its toll on auh property but I convinced this negativity will be short lived and speculative.

Telco guy 10 years ago

Your remarks sound very similar to what was said about Dubai. Actually, "this time is different" has been said at the early start (and later) during every single bubble. You still did not explain how the flaky legal framework (property rights) has been changed nor how the "implicit warranties" will be any different nor any change in the regulation of the industry. Second, real estate price increases (nor any other asset inflation) is "wealth generation" it is as best "wealth transfer". Be careful about this please. Sunil, no bother answering but i will give it a try. Dubai blossomed during (because) the loosest credit market most people can remember. We are right in the opposite situation now and for a very long time. No cheap money. If you are so bullish i advise you to put your money where your mouth is and go long on real estate. Same old, same old.

Paul King 10 years ago

You can pretend that things are back to normal and you can act as if they are back to normal. You can even invest as though they are back to normal but you can also lose your money. Thing's are not normal at all. They're different. The 1982 to 2007 period was...mostly...a boom time, caused by rapid increases in debt, asset prices, and consumer spending. The next period is...mostly...a bust time - when asset prices, private debt, and consumer spending go down. Sooner or later, but probably sooner, the stock market will realize it. Get ready for the next crash! Don't touch desert based property markets with a barge pole! Much better to look East if sustainable property is your thing.

raj 10 years ago

It seems u have lost money in the uae re market ! I was a big fan of the Dubai property scene till 2006. My last property I purchased was in 2006 and sold in 2008. I don’t have a single unit in Dubai, had no losses and also managed to make a little bit of money along the way. Trust me I know what I am talking about. The time is ripe to invest in AUH,give or take a couple of months. If you have not been following the re market in AUH, prices have dropped by around 15%+ (avg) so there is no question about a price bubble at this point in time! It s funny you mention a phenomenon such as a ‘bubble’ like it takes place over night, it does not and that is where the opportunity lies! There are risks attached to all sort of investments and one should be vigilant while trying to exploit them. Follow basic principles like leverage with in your means, have a long term approach, sensible expectations and most importantly learn to book your profits. The freehold market is in its infancy at AUH.They are working on improving the legal framework and the numerous other flaws. It all comes down to a simple point and that is if you have confidence in the local authorities, in the AUH government. If yes, then AUH RE would be a very interesting lucrative long term choice. IF you are negative about one of the richest, most ambitious governments in the world you have no business investing into the AUH Re. When the value of an asset or investment gains you are creating, generating capital. Hence the term capital gains. Wealth transfer on the other hand is the transfer of wealth which may or may not involve gains / losses. It seems like your little theories are pretty messed up. Happy investing!

Telco guy 10 years ago

1. No I lost no money in Dubai real estate market. I passed. I saw people lose, some people go neutral and some people win. 2. You want to play market timing, that is fine with me. I have no issue with that. I suggest you read Taleb's work (the black swam is the most accessible) if you want to understand what means "collecting pennies in front of steam rollers" Just keep in mind that timing the market is one of those things that most people think they are good at (like driving). Also check all the research on executives overestimating their ability to take decisions. 3. Trust is in even shorter supply than credit in this market. Again be my guess. 4. Again, When an asset price increases you are not generating wealth, you are transferring from the next owner to the current one. It seems you can not grasp the difference. Many people in the US/UK could not either. 5. My little theories mess up? if you say so... Not that you have provided anything tangible to counter the arguments (same risky legal framework, no easy credit anymore ...) You are just reheating all the arguments once said about Dubai. And even willing to sit at the poker table with the same people,what else can i say?

Michael R 10 years ago

Dubai killed the goose that laid the golden egg. Over-construction and outlandish projects meant that when the crash came, they were hit hard. Abu Dhabi had just got going. Dubai has an oversaturated market and continues to add new properties every month to city that is stryggling to maintains businesses and jobs. Witness how many more people are working in Abu Dhabi but commuting from Dubai. Abu Dhabi has a very limited supply of apartments, mainly on Reem, that people can buy. There is massive demand for accomodation - couple that with the fact that most people's housing allowances go on rent rather than on a mortgage for a property they own - means that once these apartments are available, the market will take off again. Those advising on investing in the Abu Dhabi property market are therefore the ones to listen to rather than the naysayers - as you'll see in a few years time.

Wildwine 10 years ago

Sorry, it appears you are the one who has got theories messed-up. First of all do not generalize; everybody who writes something negative about property market have not lost money on it. Just because you did not lose money does not make you an expert in the market ! I do not understand how to "take a long-term view" yet "book profits"??? If I want to take a long term view, definitely I am thinking capital gains; I fail to understanding how wealth transfer mechanism is not relevant here???