Affordable housing a concern in Abu Dhabi

Abu Dhabi has become more affordable for its residents as rents remain under deflationary pressure, but concerns still linger about affordable housing, according to a new report.

“The issue of “affordable housing” is still something that has yet to be fully addressed with the current inventory of ongoing developments targeted mainly towards high end markets,” the real estate consultancy said in its third quarter report.

“Accommodation at the lower end of the price scale, are typically devoid of suitable facilities and amenities and often have no connectivity with suitable transport nodes. Any plans for delivering affordable housing must consider the availability of wider transportation options and the proximity to key services that currently act as a deterrent to living outside central areas,” the report said.

In September, Craig Plumb, Head of Research Mena, Jones Lang LaSalle (JLL), told Emirates24|7 that only a few developers in the capital had announced affordable housing projects, despite the Abu Dhabi Urban Planning Council (UPC) directing at least 20 per cent of new residential property to be set aside for middle-income earners.

“It is indeed the government’s policy, but to date, we have not seen many developers announcing projects that meet this criteria. This gets to the root of the problem with affordable housing – if you speak with the developers they will tell you they just cannot provide housing at the rentals stipulated by the Urban Planning Council and still make an acceptable economic return,” he had said.

Overall, average residential rents in the capital fell by seven per cent in the third quarter compared to second quarter. The trend - older and inferior units - performing the worst continued with rates declining by over 10 per cent as the wider availability of new product and increasing competition from new developments took its toll.

Even though prices of residential properties remained stable, starting from Dh11,300/sqm for properties on Reem Island and Raha Beach developments, CBRE said the appetite for buying properties remains generally weak with further delays on project completion and actual handover of units impacting on investor appetite.

In addition to ongoing supply concerns, limited access to available finance continues to constrain the sales market.

“Only those with access to significant capital are able to secure the best terms, preventing many potential end-users from joining the property ladder,” CBRE said.

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