JLL says further incentives to buy will be offered in form of more generous post-handover payment plans
The introduction of VAT this month is expected to add further incentives to potential property buyers in Abu Dhabi in the form of more generous post-handover payment plans, according to a new report.
Consultants JLL said that this is because the VAT regulations on residential sales offers developers a zero-rate on all residential sales within three years of the completion of a project. Any home sale done after three years will be subject to the 5 percent VAT.
Its 2017 End of Year report added that both apartment and villa sales prices saw slight declines over the last quarter, while rental indices remained flat.
Investor sentiment has been negatively impacted since 2014 when oil prices started declining, the report noted.
It said there were 3,000 residential units delivered in Abu Dhabi during 2017, with 88 percent of completions being apartment units bringing the total stock to approximately 251,000 units.
The future supply is expected to shift to the New Islands (Saadiyat Island, Reem Island, Yas Island and Raha Beach), comprising more than 60 percent of projects currently under construction.
JLL said by 2020, 12 percent of the total residential supply in Abu Dhabi will be on New Islands, compared to 8 percent in 2017. This trend is predominantly driven by the high number of apartment completions on both Reem Island and Al Raha Beach.
Limited future supply is expected to enter within the main Abu Dhabi Island representing approximately 57 percent of the total residential supply in Abu Dhabi in 2020 compared to 62 percent in 2017.
Apologies, your article is not correct regarding the sales of residential property once three years have elapsed from the date of completion. Such sales will be exempt from VAT.