Sale prices and rentals of villas in Abu Dhabi are likely to drop owing to fresh supply entering the market and a number of people shifting to live on the outskirts of Dubai due to its "affordable rates", said real estate experts.
Mohanad Alwadiya, Managing Director, Harbor Real Estate, said: "Villa prices in Abu Dhabi are starting to soften as more units start to flow into the market. This trend has affected the attitude of landlords and sellers and has forced them to become more flexible when it comes to price points and payment terms."
He said currently in Al Reef Villas, a two-bedroom villa was going for Dh1.1 million, a three-bedroom villa for Dh1.6m, a four-bedroom villa for Dh1.7m and a five-bedroom unit for Dh2.3m.
In Al Raha Gardens, a three-bedroom villa is priced at Dh2.1m, while four-, five- and six-bedroom villas are at Dh2.5m, Dh3.1m and Dh3.6m respectively.
"We expect this trend to continue during 2010 as more units are expected to be handed over and the flow of people relocating from Abu Dhabi to 'more affordable' Dubai continues in the short and medium terms," said Alwadiya.
Paul Maisfield, General Manager, Asteco Abu Dhabi, said: "Villa rents in the second quarter of 2008 were on average around Dh200,000 per annum for a three-bedroom villa, Dh245,000 per annum for a four-bedroom and Dh330,000 per annum for a five-bedroom villa.
"Rents reached a peak in the fourth quarter of 2008, with average rates as high as Dh380,000, Dh450,000 and Dh530,000 per annum respectively for three, four and five-bedroom villas. Following this peak, however, rents have fallen by an average of about 40 per cent from the fourth quarter of 2008 to the fourth quarter of 2009.
"Currently, in Sas Al Nakhl, a leasehold development by Sorouh in the eponymous area, a three-bedroom villa is ranging from Dh220,000 per annum to Dh240,000 per annum. A four-bedroom villa in Golf Gardens, a development by Sorouh adjacent to the Abu Dhabi Golf Course, is from Dh310,000 to Dh360,000 per annum. In the same development, a five-bedroom villa ranges between Dh370,000 to Dh480,000 per annum."
Maisfield added that during the fourth quarter of 2009, rents for villas on the main Abu Dhabi Island declined between 10 per cent and 20 per cent, with an increasing number of landlords willing to accept more realistic rents to secure tenants. "The largest falls have been seen among the larger five-plus bedroom villas at the top end of the market," he said.
According to Asteco: "There are currently around 50 vacant villas at Al Raha Gardens, which have recently been handed over in the final phase and there is little availability at Sas Al Nakhl."
Loshini Lawrence, Abu Dhabi Operations Manager, Better Homes, said rents in Abu Dhabi are competitive and market-related, although the location, quality and price in most instances do not match. Better Homes said the average rate of return per annum on villas was around 10 per cent and 12 per cent.
"The Al Reef villa development is very popular right now. Though prices are market-related, they would have attracted more buyers and tenants if the bedrooms included cupboards and the kitchens included white goods," Lawrence said.
Meanwhile, the mortgage market in the capital is said to be buoyant, with up to 90 per cent mortgages available.
"Lenders tend to favour major developers and for these, they are prepared to lend against under-construction properties, as well as for the few completed units that are becoming available. Abu Dhabi Finance, Abu Dhabi Commercial Bank and Al Hilal Bank are the most active lenders in the Abu Dhabi market," said Maisfield.
According to Asteco, there are currently only two villa developments available for investment as freehold for all nationalities – Al Reef Villas and Hydra Village.
"These are both mid-end developments, that are affordable to a larger buyer base, including Western, Arab and Asian expatriates as well as UAE nationals.
"Other freehold villa developments are only available to UAE nationals who have predominantly bought them for investment purpose and rented out to expatriates, as most community villas do not suit the UAE nationals' requirements," said Maisfield.
Asteco said there was a certain amount of payment default by buyers when prices in Abu Dhabi fell rapidly in the last quarter of 2008.
"However, developers have generally worked with investors to find solutions, including consolidation and price adjustments. As developments have progressed, the numbers of defaults have reduced," said Maisfield.
Zaya is currently offering a limited number of beachfront estates and water villas in Abu Dhabi for sale in the range of Dh22 million to Dh55 million in its Nurai Island development.
"We offer two types of beachfront estates; shoreline with a built up area of 17,707 square feet, and Seaside, with a built up area of 18,730 square feet. Our water villas range around 10,011 square feet. Prices for our villas start from Dh2,500 per square foot depending on the location and square footage of the villas," said a company official.
When completed, Nurai will have 49 homes, a luxury retreat with all amenities. The overall project is 45 per cent complete with infrastructure in place and construction under way on half of the villas. Approximately half of the homes are still for sale.
"We sold 70 per cent of the project and only 20 percent of our clients having defaulted since the financial crisis.
Zaya said all its buyers have a lot of liquidity and have not requested for mortgage financing. Nevertheless, the developer is in discussion with banks to offer mortgage financing, he added.
Project name: Nurai Island
Location: North East of Abu Dhabi,25 minutes by boat from the mainland and 15 minutes by helicopter from Abu Dhabi’s international airport
Type of property: 99-year leasehold
Price: Dh22 million to Dh55m
Rentals: $4,500 to $5,000 per night for the watervillas
Project name: Hills Abu Dhabi
Developer: Green Emirates Properties
Location: Opposite Officers’ Club, Abu Dhabi
Type of property: Super-luxury villas/freehold for UAE nationals
Price: High-end luxury villas range between Dh22m and Dh32m for five-bedroom villas and the mid-end luxury villas are Dh7m upwards for five-bedroom villas
Project name: Golf Gardens
Location: Adjacent to Abu Dhabi Golf Course
Type of property: Mid-to-high-end/freehold for UAE nationals
Price: Dh2.8m to Dh6.6m for a six-bedroom villa
Rentals: Dh260,000 per annum to Dh280,000 per annum for a three-bedroom villa to Dh570,000 per annum to Dh650,000 per annum for a six-bedroom villa
Project name: Al Reef Villas
Developer: Manazel Real Estate
Type of property: 198-year leasehold for all expatriates
Location: Near Al Raha Beach and Abu Dhabi International Airport
Price: Dh1.1m for a two-bedroom villa to Dh2.3m for a five-bedroom villa
Rentals: Dh120,000 per annum for a two-bedroom villa to Dh200,000 per annum for a four-bedroom villa
Project name: Al Raha Gardens
Developer: Aldar Properties
Type of property: Mid-to-high-end project/freehold for UAE nationals
Location: In the Al Raha Beach Development area, close to Abu Dhabi International Airport
Price: Dh2.2m for a three-bedroom villa to Dh3.6m for a five-bedroom VIP villa
Rentals: Dh200,000 per annum for a three-bedroom villa to Dh350,000 per annum for a five-bedroom villa
Project name: Mangrove Village
Developer: Seba Real Estate
Location: Near Officers’ City
Type of property: High-end/leasehold
Rentals: Dh400,000 per annum for a four-bedroom villa to Dh650,000 per annum for a five-bedroom villa. Asking rent. Not actual transactions
Project name: Khalidiya Village
Location: Khalidiya Area
Type of property: High-end/leasehold
Rentals: Dh320,000 per annum for a four-bedroom villa to Dh500,000 per annum for a six-bedroom villa
Project status: Completed
Project name: Al Gurm Gardens
Developer: Borooj Properties
Location: Bateen Airport area
Type of property: Mid-end residential/leasehold
Price/rentals: Average rentals of Dh350,000 per annum for five-beds (asking rentals by the developer)
Project Status: Completed
Project name: Sas Al Nakhl
Type of property: Mid-to-high-end/leasehold
Location: Adjacent to Abu Dhabi Golf Course and Abu Dhabi Cricket Stadium
Project status: Completed
Rentals: Dh220,000 per annum for a three-bedroom villa to Dh350,000 per annum for a five–bedroom villa
Source: All data, information and pictures have been sourced from Asteco Property Management, Harbor Real Estate and Better Homes
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