Regulatory Changes Will Boost Real Estate RecoveryThursday, July 22, 2010
The significant regulatory and legal changes that are being announced in the recent days have signalled positive steps that should assist future recovery of the property market in Abu Dhabi, according to leading figures from the industry and legal field. Participating in the discussions arranged as part of the Cityscape Connect Business Breakfast here on Wednesday, they acknowledged that property market in Abu Dhabi continues to be defined by a shortage of good quality options in both commercial and residential units. “However the downward trend of rents is signaling a shift in this balance despite the levels of interest improving in recent months”, they added. “There is a legal framework in place in Abu Dhabi to deal with real estate and that framework will hopefully be shortly augmented by additional legislation dealing with Strata title, Escrow, brokerage and mortgage law. That’s a step in the right direction,” said legal expert partner in Ashurst Abu Dhabi Matthew Hooton.
Mathew said at the Cityscape Abu Dhabi Conference held in April 2010, the municipality indicated they hoped additional legislation would be brought in by the end of the year. Mansoor Ahmed, senior strategy and planning manager, Manazel Real Estate, talked about the impact and implications new property would have on the market. He said at present, commuters making the journey from Dubai to the capital were probably spending somewhere in the region of Dh25000 to 30,000 per year taking into account fuel and car maintenance charges. If car depreciation charges were also taken into account that figures would go up to Dh45,000. “I think that more availability of lower cost units in Abu Dhabi will see people coming back, although it may take a year or so,” he said. “When the delivery of an estimated 5000 to 6,000 new units will start in September this year – the first thing that will happen is people paying high rents in Abu Dhabi will leave their old expensive apartments for cheaper ones.
Gradually, commuters from Dubai would be next. Once cheaper units in Abu Dhabi come on the market, it makes more sense for people to move back,” he said. According to him, there wasn’t much in the way of assets available for purchase, for international investors interested in investing in the capital “If international institutional investors are coming to Abu Dhabi, they don’t buy one or two units they want to buy whole buildings. There is a lot of supply of commercial estates but only three towers available that can be purchased by international institutional investors, such as the Sky and Prestige Towers. Other commercial property on the market isn’t available for these types of investors.” He added that in order to attract these investors, it was essential to have a clear legal framework relating to ownership of property for foreign investors.Source: Khaleej Times