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Abu Dhabi attracted nearly Dh180 billion in real estate investment in 2008 but such projects have failed to push prices down because of strong demand, the Abu Dhabi Department of Planning and Economy (DPE) said yesterday.
Despite the global financial crisis and the ensuing decline in commodity prices worldwide, rents and property prices in the emirate remained high and the market could start to stabilise only within four years, said Ahmed Al Fayeq, an economic researcher at DPE.
In a lecture on the Abu Dhabi property market, Fayeq estimated the total investments pumped into the emirate's real estate sector at a staggering Dh880bn between 2004 and 2007.
"In 2008 alone, the emirate attracted an estimated Dh180bn in the real estate sector, including expansions and new projects," he said.
"As the emirate is pushing ahead with such investments despite the global crisis, our expectations are that nearly 180,000 new units will enter the market between 2008 and 2012. More units will enter this year as developers are pressing ahead with their planned projects. It is clear that the global financial crisis has no impact."
Fayeq said Abu Dhabi authorities are still sticking to their policy of building new low-cost housing units in a bid to stabilise the market and reverse a rapid growth in rents and property prices over the past three years. He noted that about 20 per cent of the new units would be for low income investors.
"Of the 180,000 new units that will enter the market until 2012, around 140,000 will be for housing purposes," he said. "My expectation is that the real estate market will begin to stabilise in the next two to four years in case all planned property projects are carried out."
The DPE researcher said rents and property prices had sharply increased over the past few years because of strong demand, supply bottlenecks, and higher construction costs. "Another factor is that developers are selling most of their units on the map," he said.
"In the short term, I think Abu Dhabi's real estate market will remain in a state of imbalance because of excess demand and supply shortages, in other words, it is a seller not a buyer market, but this might change in time when demand slackens and supply picks up, which will turn it into a seller-buyer market," said Fayeq
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