Over supply in Abu Dhabi residential market

andres del risco

Property markets are one of the most clear cut examples of the classic economic effects of supply and demand and currently this can be clearly seen in Abu Dhabi’s residential sector.

The market is saturated with stock and consequently asking prices have fallen significantly as buyers try to get the best deals and sellers compete with each other to offer the most attractive value for money.

The Statistics Centre - Abu Dhabi (Scad) has released new data which revealed that numbers of available residential units are still very high, even after a drop in new constructions in the emirate during Q1 2013.

In the first three months of this year 1,203 residential towers were completed in Abu Dhabi, as opposed to the 26 new industrial buildings and 16 public facilities which were built in the same period.

It isn’t just the areas which have newly completed construction projects that are affected, as the knock on effect of so many new buildings is that it makes older properties more difficult to sell. Nor is it just houses and towers whose values are falling, as villas also seem to be affected.

Although sales values may be hit, rental yields are performing well as evidenced by the demand for lets in new builds in Saadiyat Island and Al Raha Beach, and overall confidence seems to be undimmed.

The recent merging of developer giants Aldar and Sorouh indicates that there is plenty of scope for still more new construction, and the announcement by Abu Dhabi’s Executive Council plans to add Dhs330 billion into infrastructure projects over the next five years shows that building projects will increase even more.

The UAE as a region is increasingly drawing in overseas investment due to the secure economic conditions and positive outlook, and Abu Dhabi looks likely to challenge Dubai as the property hotspot over the coming months.

If you are thinking of sending money to the UAE make sure to compare the market beforehand in order to get the best deals on travel money exchange rates.

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