Developers in Abu Dhabi are focusing on the turnover of properties that will see 5,000-10,000 new housing units ready for occupancy this year, marginally slashing rents by 5-10 per cent.
Ninety per cent of the new arrivals would be in the category of medium to upscale apartments, while the rest will be villas, according to Gurjit Singh, Chief Operating Officer of Sarouh Real Estate.
He told reporters on the sidelines of the two-day Abu Dhabi Economic Forum that the Sarouh Sun and Sky Towers on Al Reem Island will contribute about 1,000 units to the 4,500-5,000 supply expected this year.
But Mathew Green, Head of Research and Consultancy of Dubai-based property consultancy CB Richard Ellis Limited, put his estimates of new arrivals at a much bigger number of up to 10,000.
These estimates include new capacities being built in the free hold investment zones, where foreign investors can buy properties, as well as on the main island developments of Capital Business District, Khalifa City and others where only Emiratis can own real estate.
Giving a break-up of the expected supply, Green expected that the coming months would see phase-wise handovers to property owners in Al Reef, a project of Manazil Real EstateManazil Real EstateLoading..., along with Marina Square where couple of thousands units could be delivered.
The property analyst said that the independent apartments and villas being constructed outside the investment zone in Khalifa City and other localities across the capital city will edge up the numbers.
"It would be a single digit negative growth of 5-10 per cent on average in the year that depends on the property, its location and other such factors," said Green.
He said the reason for a modest decline in rents was that with the new infrastructure projects being announced in the emirate, it would create more jobs that would neutralise some of the additional supply coming into the city.
In 2009, categorised as the worst year for the real estate sector, he said the capital saw a drop of 30-35 per cent in rents. Green said there are no fresh estimates on housing shortfall in the emirate. However, he said that the government estimated a gap of 20,000 housing units in 2008.
According to a recent study by Investment Boutique, a property consultant, the shortfall is expected to shrink to 33,000 units in 2012 down from 45,000 units. Earlier, participating at a panel discussion at the Forum, Singh said the real estate market is seeing initial signs of recovery.
About the new housing units coming on to market in the emirate, Singh said that the supply would be in a phased manner over the year.
"More supply is a healthy sign...it will give more options to the people to rent property," he said. He added that rents in the emirate are not falling sharply as in Dubai because there is "insufficient" good quality stock. With the new stock coming in, the market will "stabilise."
Singh also highlighted the issue of non-performing properties stock of unsold units growing with the property developers.
It is time to start careful evaluation, Singh said as in many jurisdictions, special investment vehicles had been created to take away such portfolio from developers.
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