Abu Dhabi finance provider ups coverage as prices settle

The group, which is a joint venture between Abu Dhabi Commercial Bank, Aldar, Mubadala Development Company, Sorouh Real Estate and the Tourism Development & Investment Company (TDIC), was created in November 2008 to provide mortgages to home buyers in the emirate, with initial funding of Dhs500m .

These shareholders include companies which are estimated to represent more than two thirds of the new units currently being built in Abu Dhabi.

ADF, which claims to cover 60% of Abu Dhabi's property market through its backers and a recent deal to offer finance to Profile Group Properties customers, has launched a summer marketing drive across print, outdoor and broadcast media in order to raise its profile among potential home buyers.

The four-month initiative plays on what ADF sees as the general relative strength of the city's real estate market, through which it is aiming to stimulate buyer activity as the sector enters what is generally seen as the quiet period of the year.

Price floors

In a report on the emirate's property sector in Q2, Landmark Advisory concluded that confidence in the market was beginning to solidify and that price floors were emerging based on the primary market price for each development.

The group has also released its sales price guide for June, which shows no difference to prices released in its report for the previous month. According to Landmark Advisory, two bedroom villas in Al Reef still fetch between Dhs550 and Dhs700 per square foot, three and five bedroom properties between Dhs500 and Dhs650 per square foot, and four bedrooms between Dhs450 and Dhs700 per square foot.

Apartments in the development fetch between Dhs800 and Dhs1,000 per square foot for one and three bed properties, while two bedroom flats fetch between Dhs850 and Dhs1,050.

Landmark says that apartments in Al Reem are also priced at the same level as May, with studios and three bedroom flats worth between Dhs1,000 and Dhs1,600, one bed units worth from Dhs900 to Dhs1,500 and two bedrooms between Dhs1,000 and Dhs1,500.

Project prioritisation

Sorouh, which is developing a number of its flagship projects on Al Reem, including the Sun and Sky towers, is offering financing for these through ADF, with favourable rates that are designated to support struggling owners and investors.

The group has also begun cutting the prices of some of its projects, especially Ghadeer, and has announced that it will hold back a large amount of its inventory for leasing - highlighting a shift in priorities. The developer also has plans to borrow up to Dhs500m in order to fund projects in 2011 and 2012.

Similarly fellow developer and ADF backer Aldar has indicated that, as part of a reprioritisation, half of its major projects are to be postponed or delayed while they are re-designed, as it focuses on delivery of the other half of its portfolio.

Some of the unsold stock is also being repriced in order to target middle income buyers. Singularly Aldar has had no major liquidity problems so far, according to industry analysts Investment Boutique, and will be able to complete existing projects using proceeds from its bond issues.