Monday, September 08, 2008

Value of properties on Reem Island found appreciating

Property prices on Reem Island, a commercial, residential and business project, across the coast of Abu Dhabi, have more than doubled touching Dh.3000 per square foot from Dh.950 over the past couple of months.

According to Vincent Eastone, Sales Director, Sherwoods Independent Property Consultants, a rapid growth has been noticed during the past three years, not only in terms of new projects, but also in prices of properties. The current Abu Dhabi market, although interesting, is largely led by speculation. Although speculation is healthy, as it helps attract international interest and attracts investors seeking short-term gains, it is not sustainable.

There exist high chances of creating a bubble effect. For instance, what should have been a gradual increase over a three year period is seen happening in nine-months.

A market attracting short-term investors will have a risk factor involved, as to whether the investors would remain committed and continue their future payment plans or whether they would exit.

Easton also pointed out that the situation is very much the same in Dubai. For instance, when during the first six months of this year, several people were crowding during the launch of residential units by Emaar at Downtown Burj Dubai, while only 200 to 300 units were available. There is still a huge demand for major projects, and this indicates that there is still a healthy level of interest in UAE.

When compared to other international cities, Dubai is comparatively a young market, maturing gradually. Establishment of RERA has been a major step ahead, although, there is need for more structuring regulations and transparency in the market. RERA and Dubai Land Department have done good jobs till date, Easton commented.

No comments: