While Dubai saw a return of off-plan sales in a big way during the most recent Cityscape Global event last September, the Abu Dhabi market is expected to have very limited off-plan sale activities this year, with developers choosing to slow new launches given that the city’s residential market seems to not have much capacity for increased supply.
“The off-plan market remains relatively soft, with the exception of major developers such as Aldar, who have underlined their standing in the market through the success of launches such as Waters Edge in 2017, and more recently developments like Mayan,” Matthew Green, head of research and Consulting, CBRE Middle East, told Thomson Reuters Projects in an email interview.
“However, given the constrained market conditions we don’t see a big return of off-plan sales at this time,” said Green.
In its recent Abu Dhabi market report, Core Savills stated that it remained confident in the mid-to-long term prospects for the capital’s residential market, but that in the short term rents and prices are likely to continue declining for 12-24 months.
Though developers have slowed new property launches and construction schedules, the market will still see a substantial number of new supplies over the next two years. During 2018, around 7,000 new residential units could be handed over, whilst 200,000 square metres (sq m) of office GLA will also be delivered, according to CBRE. In the hospitality sector, around 2,500 keys will be completed.
“This is likely to further pressurise performance across all key sectors, as markets remain in a down trend,” said Green.
The affordable housing segment is expected to grow as uncertainty surrounding the job market, coupled with rising cost of living, has forced many tenants to look for more affordable options.
“Over the last 24 months, we have seen many occupiers downsize and focus on more affordable accommodation and locations,” said Green, noting that this shift is being driven by the rising cost of living (fuel, water, electricity, VAT,), an uncertain employment market, and local employers scaling back on the provision of benefits such as housing allowances and utility payments.
Yet despite this, a number of developers are expected to offer off-plan homes with attractive payment plans and other incentives attached at this year’s Cityscape Abu Dhabi event beginning on Tuesday, given that on-site sales have been permitted during the three-day event. More than 100 local and international developers will showcase residential projects for an anticipated 18,000 visitors.
Carlo Schembri, exhibition manager at Cityscape Abu Dhabi, said: “Off-plan projects and sales will always make up a big part of the show as big name exhibitors are set to showcase their latest projects to impress investors on the show floor.”
He said over email that a healthy mix of residential, retail and commercial projects from luxury-themed buildings and units to affordable housing will be showcased.
Abu Dhabi-based IMKAN is promoting its Maker’s District project, which is an 18- hectare master-planned development on Reem Island.
Al Fahid, another developer from Abu Dhabi, is promoting its Al Fahid Phase I, a luxury seaside project including villas, apartments and townhouses.
Dubai’s Azizi Developments is showcasing its recently launched canal facing units at Azizi Riviera Phase 3 and Azizi Victoria in Meydan.
“Our target audiences are primarily Emirati and GCC nationals, followed by expats who wish to make the UAE their home,” Mirwais Azizi, chairman of Azizi Group told Thomson Reuters Projects by email.
MAG Lifestyle Development plans to launch its new MAG Eye project in the Meydan district of Dubai during the event, besides showcasing four of its existing projects: MAG Creek Wellbeing, MBL Residence, MAG 230 and MAG 318 - all Dubai-based.
Binghatti Holding is selling two of its Dubai-based projects, Binghatti Stars and Millennium Binghatti Residences, at the event.
“Most of the projects launched recently are offering very reasonable pricing and provide buyers with opportunities that were perhaps unavailable earlier. We expect to see more of these projects launched during the event this year and this should give a boost to investor sentiment in the UAE,” company CEO and Head of Architecture Muhammad BinGhatti told Thomson Reuters Projects in an email interview.
He said that Abu Dhabi’s real estate sector has shown positive signs of improvement as the market is becoming more stable.
While it may take time for the Abu Dhabi property market to completely rebound, Matthew Dadd, a commercial real estate partner at Knight Frank Middle East, is of the opinion that the ongoing decline in prices in Abu Dhabi is slowing.
“Recent data shows that price falls are beginning to moderate in Abu Dhabi and on the back of greater commercial activity, we anticipate that we will see greater demand in the capital,” Dadd said.