Abu Dhabi prices begin to level off

According to a report by HSBC's regional research bureau, advertised prices of properties for sale in the UAE capital rose by an average of 2% in April and 7% in May.

Results were based on prices for apartments, which rose by 8% in May, and those for villas, which in contrast continued to fall (losing 4% on the previous month).

The report puts the main reason for this down to lower affordability due to the difficulty that investors are having in accessing finance, as the entry point for villas is more expensive than for apartments, rather than marking out a specific shift in unit preference.

The HSBC report also points to a decline in the number of listed properties being offered for sale, down 30% from February (1,215) to May (854 units), as the amount of distressed stock clears.

Average prices

A Sales Guide for June prices in Abu Dhabi, released by Landmark Advisory, has shown an expected value for purchases in the various developments coming online.

Projects on Reem Island and Hydra Village seem to have witnessed the largest slides from their peak asking prices.

Reem Island unit prices go from Dhs1,000 to Dhs1,600 per square foot for studios, Dhs900 to Dhs1,500 for one bedroom apartments, Dhs1,000 to Dhs1,500 for two bedroom properties, Dhs1,000 to Dhs1,600 for four bed units and Dhs1,050 to Dhs1,400 for four beds, according to the group.

In Hydra Village prices for two bedroom villas went from Dhs400 to Dhs700 per square foot, Dhs450 to Dhs750 per square foot for three bedrooms, and Dhs450 to Dhs550 for four bed units. This may partly be a reflection of an ongoing dispute between a group of investors and Hydra Properties regarding payment schedules and penalties for properties in the development, whose completion has now been pushed back from mid-2009 until Q4 2011.

The figures were a combination of transactional data and broker surveys.

Aldar 'well positioned'

Aldar Properties, one of whose developments is Al Raha Beach, where prices have managed to hold their value better than many other projects coming online, has been singled out by Moody's financial rating agency as being in a good position to see out the financial crisis.

The company is boosted by the current undersupply of housing in the emirate, with a further 34,000 units needed this year to make up the shortfall, and what Moody's has said is its method of 'adjusting to changing market conditions'.

The developer announced recently that it was adjusting some projects to add more affordable housing to its portfolio in response to market needs, including launching the government-backed Al Falah project to build 5,000 homes for Emiratis, and has looked into expanding its recurrent income portfolio.

HSBC's research report warned, however, that the sheer scale of the company's developments would stretch its operational capacity, introducing the risk of delays in handover.