Property prices in Abu Dhabi have dropped by up to 25% since peaking in the Q3 of last year, according to a new report published on Saturday.
The Abu Dhabi Real Estate Report, launched by Landmark Advisory, which looks at the price correction unfolding in both the freehold and leasehold market shows prices in the capital are now approaching their original figures – down 15 to 25% on Q4 2008.
Meanwhile, the for properties being delivered later than 2011 average prices were likely to fall by up to 10% below the original, quoted in Q2 of 2009, the report added. This was because prices in Abu Dhabi had been benchmarked to the inflate prices seen in Dubai that meant there was little room for inflation before liquidity, according to Jesse Downs, head of research at Landmark Advisory.
“Freehold and leasehold prices spiked after CityScape Abu Dhabi in May 2008, and despite solid demand fundamentals, the market could not sustain such high prices in the short- to medium-term,” he said.
“Investors and speculators saw Abu Dhabi as the ‘next big thing’ after Dubai, but by then the financial crisis had already hit the UAE. Launch prices were benchmarked against Dubai’s already inflated property values, so there was little room for appreciation even before liquidity dried up,” added Downs.
At present the emirate’s property market was in “gridlock” because buyers were looking at absolute prices, while sellers were still looking for the original price, he said. “Due to this incompatibility, sales have ground to a halt. Developers are now facing the prospect of renegotiating payments to prevent defaults and preserving enough cash flow to continue construction,” explained Downs.
The rental market had seen rents grow by 30% and 80% respectively for villas and apartments between Q4 2007 and Q4 2008, the report shows. However, rents had now stabilized because people had taken other accommodation options such as serviced apartments, house-sharing or had moved to Dubai and Al Ain. (arabianbusiness.com)