|
Abu Dhabi Property Prices Push Limit of Affordability
|
A senior executive in Abu Dhabi earning an average of Dh60,000 (US$16,635) a month can afford little more than a studio apartment on Reem Island at current prices, a new report has found.
The Abu Dhabi office of Re/Max, the property agents, drew up the study, which found that developers and sellers were targeting high-income earners without having a clear idea of who they were, or even if they existed. As a result, many properties had become unaffordable, even for relatively well-off potential owners.“I have yet to come across a study that attempted to relate property prices to the income and expenditure of the potential buyers,” said Dr Mohamed Guidoum, the chief executive of Re/Max, in the report. “Such a study would identify the different segments of buyers and help developers price the properties accordingly.”
Instead, prices have risen without any consideration being given to purchasing power.
“I saw off-plan property prices in Reem Island skyrocketing from an average of Dh1,000 per square foot during Cityscape Dubai Oct 2007, reaching Dh3,000 per sq ft in Cityscape Abu Dhabi in May 2008,” Mr Guidoum said. “That’s a stunning 300 per cent increase in seven months.”
With prices at these levels, professionals who would normally buy their own home were often better off renting, the report said.
As a remedy to the situation, the report suggested banks hold off financing developers and issuing mortgages until local prices fell to more realistic levels. It also said developers should overcome the “mentality of not reducing prices to avoid hurting old buyers [speculators]”. More land also needed to be set aside for affordable housing. The market needed properties as low as Dh400 per sq ft, the report added.
|
|
|
