The Abu Dhabi real estate market resides somewhat uncomfortably in limbo at present. Part of this is due to the economic downturn on the whole, whilst on the other hand on the micro-level it is also affected by cheaper renting prices available in nearby Dubai (also a result of the downturn).
There is interest in the area of Abu Dhabi, however the discrepancy between property valuation and actual price at point of sale means that down payments required become a deterrent for interested buyers and often result in no sale.
In the freehold market meanwhile prices continue to drop, and will continue to do just that in the coming quarter. Despite this, increases are forecast for the last quarter of this year and the early phases of 2010.
With regards to apartments to rent in the area, prices have remained fairly high and any examples of reduced rent are muted. Short supply in terms of completed property developments has undoubtedly been a deciding factor.
As mentioned, reduced renting prices in Dubai have caused people to move from Abu Dhabi to the area, as has the perception that in Dubai exists a greater choice of well-designed property.
Banks, eager to encourage recovery, offer mortgage loans which reach as high as 90 per cent of the property value. The interest rates remain high at 7.5 – 9%, however, and tactics include targeting and securing mortgages with property owners looking to free up some funds. An additional strategy has been to offer mortgages at original property prices in order to stimulate and mould some form of activity in the U.A.E. property market.
Investing in Abu Dhabi demands a cautious strategy in search of low-risk opportunities. Such opportunities include properties where it can be seen that prices have been little affected and developments which are practically complete. New and planned projects are few and far between in 2009.
A conflicting relationship between property valuation and sale price has, as a consequence and much to the dismay of buyers, mean larger and uncomfortable down payments. This in turn has particularly negative effects on that between supply and demand. Should the economic conditions improve, we will see this situation in Abu Dhabi balance out somewhat. Returning to the rent it may be assumed that rates are no longer set to increase for the time being and, as supply grows over the next 2-3 years, they will surely begin to surface at sums which are much more appealing and so attract more people to the area.
