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-Increased direct sale trends eclipses conventional ‘Develop First’ tendency

Al Mazaya Weekly Report states that the GCC real estate market is looking for unconventional solutions to overcoming the current challenges and efficiently contribute to government efforts aimed at accelerating economic growth rates.

The 13th edition of Cityscape Abu Dhabi provided a valuable chance to determine the feasibility of the plans and tracks taken by real estate developers and their ability to respond to the changing pattern of demand on the part of end users and investors. The three-day event enabled real estate developers to fathom the requirements of the real market as well as those of consumer in light of the rapid changes the sector is going through.

Al Mazaya believes that Emirate of Abu Dhabi has the multifaceted potential of success reflected by the stimulus packages provided over the past period that are likely to heighten business competition and stimulate financial and economic activities. Such a momentum recorded in the emirate manifested itself in the GDP reaching $253 billion at the end of 2018, a growth rate of 14.4% Y-o-Y, with the non-oil GDP growing by 3.5% during the same period.

In addition, foreign investments in the construction sector grew 5%, ratcheting the contribution of the real estate sector to non-oil GDP to 8.2%, with the real estate sector in the Emirate of Abu Dhabi steadily proving to be one of the largest sectors attracting investments due to its high business returns, with demand continuing for new projects and units to meet the needs of new target segments at the local and external levels.

The report added that Cityscape Abu Dhabi carried a positive outlook for the market with the participation of more than 80 local, regional and international real estate developers who all offered a new package of discounts, flexible payment plans and lease-to-own agreements for many real estate projects locally and internationally. This was coupled with mouthwatering incentives on deals conducted during the exhibition. The mobility created by the event had a direct impact on stimulating demand and contributed to boosting the value and number of transactions conducted as well.

Al Mazaya underlines the importance of the developments reflected by the exhibition during its last session, which clearly showed the current tendency of the real estate developers to develop and sell land directly instead of developing and building before starting the selling process as was the case in the past. This tendency is justified by the existing real demand for those plots of land with good infrastructure facilities, with property companies currently offering land at attractive prices and high financial returns and many incentives in addition to the readiness of some real estate companies to build land for investors and buyers at low costs. There is no doubt that the increasing trend towards offering land for sale is attributed to the importance of this step in raising corporate profits and ensuring quick cash flows. It also reflects the level of adaptation that real estate developers have reached with the market conditions for the time being and for the next period.

The event coincided with the issuance of a law by the Emirate of Abu Dhabi amending the provisions of Law No. 19 of 2005 concerning real estate sector in Abu Dhabi, allowing foreigners to own freehold property in designated zones to increase foreign direct investment and boost the economy.

The new law states that whoever has a usufruct or a “Musataha” right for a term of more than 10 years, without the owner’s permission, can act on that right, including pawn it, which would ultimately boost investors’ confidence.

These developments are part of plans to stimulate the investment landscape in Abu Dhabi and consolidate the status of the emirate as a key regional investment hub. The new law is expected to have a positive impact on the real estate sector as well as many other development sectors and will encourage investors to invest in the property sector, including buying and developing the land.

Al Mazaya believes that Cityscape has proved that investor confidence remains resilient in the entire real estate landscape of the UAE during the current year. The event also proved that projects of affordable costs are more in demand than the costly ones. In addition, the event proved that the real estate market in the emirate and the UAE, in general, boasts a competitive edge attributed to the robust regulations and maturity of the real estate sector, which augurs well for future growth.

The report noted that the growing momentum recorded in the Dubai real estate market  is important for assessing the real estate market performance in Abu Dhabi, which experienced a marked improvement in investor sentiments, with the emirate attracting more than 8.8 thousand new investors and real estate transactions of about AED78 billion.