Residential property prices in Abu Dhabi are unlikely to increase until at least 2012, a real estate expert has warned.
Heather Wipperman-Amij, CEO of real estate advisory firm Investment Boutique, told Arabian Business that three major factors are driving the sector’s below-par performance in the UAE capital.
The volatile employment market has led to a far lower number of generous pay packages, meaning that there is mismatch in terms of where the market is pricing the residential products and what people can actually afford.
“In 2009 we’ve seen a much less stable employment market, meaning that many [housing] allowances have now gone away,” said Wipperman-Amiji.
Furthermore, the lack of liquidity and underlying confidence in the economy has led to instability in the sector, which has also suffered due to speculators targeting planned middle-income locations and forcing the prices up.
Lastly, the unexpected emergence of Dubai as a substitute product for the Abu Dhabi housing market has also had an effect.
“We really saw in the 2009 numbers that singles, professional couples or price-sensitive workers were willing to make the commute between the cities for more affordable housing in Dubai,” said Wipperman-Amiji.
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.
“In addition, liquidity will also remain low, particularly as some banks are waiting for more certainty around the timing of payments with regard to large restructured loans so they can figure out when that money is coming in and how they can recycle it into the retail community,” the executive stated.
Long term, Wipperman-Amiji said that big projects being delivered in 2012 should see prices start to rise due to higher employment levels, increased liquidity and more investors coming back into the local community.
The Investment Boutique CEO was speaking ahead of the launch of a new report into the UAE capital’s real estate market, which will be published next week.
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