Affordable housing holds potential in Abu Dhabi

Visitors take a look at scale models of a project at the pavilion of MAG Lifestyle Development.

Affordable housing options have grown in Abu Dhabi but there aren't many options yet for those in the mid-income category or below, a real estate expert said.

Real estate services company Colliers International's director of development solutions, healthcare, education and PPP Mansoor Ahmed said there is a new normal in the market.

Giving a holistic view about trends, Ahmed said there has been a big change in Abu Dhabi. "Some 15 years ago, Abu Dhabi Corniche and malls were the only attractions. Now, there's a New Abu Dhabi, which has transformed into a lifestyle city to live in," said Ahmed.

"There are museums, concerts, new projects, water parks and Yas Marina, etc. Then, there is world-class healthcare and education. All these aspects are needed to attract families to live in any cities."

Giving various examples of what is affordability, he said: "In 2014, of the total housing units in Abu Dhabi, only 9 per cent of property available in freehold areas cost less than Dh11,000 per sqm. Then with change of laws, 20 per cent of units were made affordable in new buildings. As of now, 15 per cent of housing is affordable in Abu Dhabi. This is a big change from the 9 per cent in 2014."

Highlighting the factors which have led to this change, he said: "The per square metre price has gone down, the overall profile of people looking for affordable housing has risen, unit size is becoming more smaller with lesser sales price."

"Let's talk about areas to rent for those with salary of Dh15,000. Those people can look at Tourist Club Area, Al Markaziyah and Al Reef. We have very less options available for people earning up to Dh15,000. When we talk about those with Dh35,000, there are few more options."

Since 2014, rents have dropped by 10 to 30 per cent.

"Rents have, however, gone down in certain areas only." This phenomenon, Ahmed said, is mainly because of new affordable housing and availability of new properties in freehold areas. "People have moved from old to freehold areas. This has put pressure on those areas. Parking is also one issue."

He said with the stable demand-supply ratio, rents will not fall further. "Lot of supply is coming but the changes in rents will not be across the board."

Talking about average yields, he said: "Studios and one-bedrooms are still giving good returns. So, affordable housing and smaller units are a good investment with 5 to 7 per cent returns."

Smaller units, lower disposable but stable income, requirements of lower cash deposits, cheaper mortgage, higher yield - all these factors will lead to more demand for affordable housings. "It is a buyer's market but those who invest for long will have a stable yield of 6 to 8 per cent," he added.

- ashwani@khaleejtimes.com