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Developers must ensure supply-demand balance

Real estate developers in Abu Dhabi need to be 'careful' not to affect the demand-supply balance otherwise everyone will stand to lose, a top official from Mubadala Investment Company said.
"A developer should ensure a right balance between supply and demand. At the end of day, an oversupply will affect the pricing and all of us will lose. So, we have to coordinate among ourselves on right products that come into the market and complement each other," Ali Eid Al Mheiri, executive director of Real Estate and Infrastructure at Mubadala, said on the sidelines of Cityscape Abu Dhabi. The three-day event will conclude today.
He noted developers in Abu Dhabi have enough work to finish for next 5 to 10 years rather than expanding into newer areas.
"Now with market being very tight and everyone conscious about cost efficiencies. Instead of opening new areas of venture, there is enough work in Abu Dhabi and surrounding areas for developers to finish the development for next 5-10 years."
Mubadala is promoting four residential developments - Lamar at Al Raha Beach, The Wave and Al Durrah Tower on Al Reem Island, The Views at Saraya on the Corniche, and new developments on Al Maryah Island. However, Al Mheiri said projects other than Lamar were developed 3 to 4 years ago and part of existing stock.
"We target mid-income sgment through majority of our offerings. The Views is scaled towards high-end and Al Maryah Island is mixed between both," he said.
Al Mheiri noted that developers have shifted focus from high-end user to low- and mid-income groups in past 3-5 years. "In the past, developers didn't get the right mixture. If you look at demand in Abu Dhabi, high-end segment comprise 10 per cent of residential units and the majority are low- to mid-income group. Today, as there is so much pressure on pricing, there isn't much difference between low- and mid-income groups. To me, the low-income group belongs to those who live in the shared accommodations. But with the current pricing in Abu Dhabi low and mid segments are already merged into one category."
Al Mheiri said developers should attract buyers, who are mostly belong to mid-income group, with not just right price but amenities too.
"Today what differentiates developments is the kind of amenities you have within your building. The buyer or the tenant has lot of variety. One can live in Al Reem, Al Raha Beach, Downtown Abu Dhabi, Khalifa or Hamdan Street. One can rent a 1 BHK in Khalifa Street but get one for same price in Al Reem where you have amenities - grocery store, gym, coffee shops etc. This is what differentiates developments in Abu Dhabi," Al Mheiri added.
- ashwani@khaleejtimes.com