Wednesday, August 15, 2007

Abu Dhabi developments do not sell like hot cakes, as in Dubai

A recent study conducted by Deutsche Bank revealed that although Abu Dhabi property market seems to be growing at a rapid pace, the developments do not sell out immediately, as in Dubai. The study pointed out that Abu Dhabi has not been successful in implementing the manner in which Dubai did, by following relaxation of foreign ownership laws.

A Research Analyst at the Bank, Mohammad Khan, said that in comparison to the pace of property sales in Dubai, the developers in Abu Dhabi get to experience "A more cautious buyer pool."

The research was based on the reports of a study of residential units being sold by Aldar Properties, the largest developer in Abu Dhabi. Mohammad found that among the 5000 residential units on sale since 2005, only 60 percent of them have been sold.

The Bank is of the opinion that the buyers in Abu Dhabi are taking cautious steps, out of fear of having to face legal obstacles, and financing of purchases.

Also, the Abu Dhabi property market has not witnessed an increased demand from expatriates, and is instead depending on the national buyers. However, the nationals in Abu Dhabi are less likely to buy from their own city, as they are already entitled to government-sponsored housing, and hence prefer investing in second homes in Dubai or outside UAE.

The expatriates may opt to buy from Aldar properties, but only two our of four major projects - the Yas Island and the Al Raha Beach are made available to non-Emiratis.

The Bank also pointed out that though the expatriates have plenty of job opportunities due to the oil industry, there are not much other booming industries.

Dubai, on the other, has drawn to its side high-profile executives to free zone developments such as the Media City, Jebel Ali and the Internet City.

Finally, although the property ownership laws in Abu Dhabi are currently on par with that of Dubai, the Bank suggests that the expatriates in Abu Dhabi are still uncertain about the legal system. In addition to this, the immature mortgage market, is also bringing about another drag on the Abu Dhabi property sector.

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