Landmark Advisory, one of the leading real estate consultancy companies in the Middle East, today announced the findings of its latest sales guide focusing on the UAE capital. Landmark Advisory forecasts that property prices and transactions in the capital are not likely to increase on the back of mortgage rate cuts and delivery of new units expected to take place at the end of the second quarter.
The limited transaction activity observed during the end of Q409 continues into January and February 2010, with existing demand continuing to focus on close-to-completion developments such as Marina Square, Al Reef Villas, Sky Tower and Al Bandar.
“The market has reached a standstill due to the ongoing postponement of delivery dates, especially for projects like Al Bandar (Q309) and Marina Square (Q309),” explained Ms. Jesse Downs, Director of Research & Advisory Services, Landmark Advisory. “This trend extends to Al Reef Villas, where the slow handover process is weakening investor confidence.”
Transactional prices in the capital have experienced only marginal declines of up to four percent as demand levels decrease and sellers become increasingly competitive.
According to Landmark Advisory, the majority of buyers in Abu Dhabi (up to 70-80 percent) purchase property through finance. Commenting on the recent announcement that the Government plans to reduce the cost of home loans in the capital, Hesham Ikhwan, Branch Manager – Abu Dhabi, Landmark Properties said: “Due to the recent rate reduction, projects financed by Abu Dhabi Finance (ADF) should start to see more demand. At present, ADF finances six out of the fourteen towers in Marina Square and we expect that these towers will receive the most interest.”
“With lower rates available and the initial completion of freehold supply, more buyers will be encouraged to purchase rather than lease,” added Ms. Downs.
“The market is currently at a standstill. While these changes are expected to stimulate demand, the improvement will be moderate in absolute terms. We do not expect the volume of transactions to increase significantly in the near future, even for close-to -completion developments. Buyers are now waiting for distressed sales, which are expected to materialize closer to handover, when the largest payment plan installment is due,” concluded Ms. Downs.
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