Property development giants dismantled their stands at the end of an international real estate show in Abu Dhabi yesterday after netting more than Dh20 billion and revealing major projects for potential investors.
Despite a surge in property prices because of strong demand and soaring construction costs, real estate has remained the most profitable sector in the UAE, while developers were surprised at the rush by potential buyers from the UAE and other countries.
Exhibitors at the four-day Cityscape Abu Dhabi described the rush at the sprawling Abu Dhabi National Exhibition Centre as a stampede and some had to cordon off their stands and recruit scores of security men to restore discipline. Besides property companies, banks benefited from the show as hundreds of clients were seen queuing at their stands for mortgage loans.
Most companies did not disclose the exact value of sales made during the show, which was extended by a fourth day yesterday to cope with the rush. But sources of the exhibitors, banks and organisers estimated the combined sales of the more than 200 participants at more than Dh20bn.
"I have talked to people in the biggest exhibiting companies and other firms that reported sales and I can tell you for sure the combined value of sales and pre-sales exceeded Dh20bn," said a source from Abu Dhabi Commercial Bank.
Other sources said total sales surpassed Dh20bn, nearly half of which were announced by Al Zorah city project in Ajman.
Other sales included about Dh1.5bn each by Aldar and Al Qudra, among the largest participants in the show. Hydra sources said sales were worth hundreds of millions of dirhams and involved apartments and villas in the UAE and other countries.
Sorouh, another giant, reported no sales as it only presented projects. "We did not put anything on the market this time but only showed our projects," said Joel Sahli of Sorouh. "Anyway, a large part of our projects have already been reserved and there have been huge sales in the past year."
Organisers estimated that more than 30,000 people visited the show and a large number either bought or booked property.
"During the first three days we recorded more than 26,000 people," said Celine Fenet, Cityscape marketing manager. "We expect more than 4,000 people came on the fourth day although the exhibition opened midday."
Meanwhile, booking clients reported a sharp increase in prices. "I tried to buy property on Reem Island and it was offered to me for Dh4,500 per square foot… this is an astronomical figure compared to last year as it is nearly double now," said Ahmed Fatooh.
The organisation of Cityscape and other property shows in the UAE coincides with a construction boom in the region, where independent estimates expect real estate and construction project to exceed $1 trillion (Dh3.67trn) in five years. The UAE is recording one of the highest rates of construction activity in the Middle East given the sharp rise in liquidity and strong domestic demand.
According to economists, the construction sector has grown by at least 20 per cent over the past five years and is poised for high growth in the coming years. They cited an upsurge in the economy due to strong oil prices, a relaxation of property ownership laws for foreigners and the absence of taxes as the main reasons for the growth.
The massive wealth of some property developers has also prompted them to push into new markets as far as Mexico.
"We have invested in Mexico and are planning to expand such investments to other countries. In Mexico, we are constructing residential housing units in Mazatlan on the Pacific coast while we are about to launch another property project in Lahore, Pakistan, involving houses and offices," said Mohammed Al Habech, commercial director at the Abu Dhabi-based Hydra.
"In the UAE, we are involved in numerous projects. During this exhibition most of the units in the projects we presented were sold out. These include apartments and villas on Reem Island, the Twin Towers in Dubai and other units."
An official from Aldar, one of the largest property developers in the Middle East, said sales included units from Al Dana twin towers at Al Raha beach at the entrance to Abu Dhabi city, Al Khubeira apartments and villas, Al Zeina flats and Munerra apartments. "Most of them, if not all, were sold out. Despite the large increase in prices, the demand is stronger than ever," said Osama Ghannoum, sales manager at Aldar.
Besides massive sales at the show, Aldar announced plans to launch a $1bn real estate fund to push expansions and acquisitions in the United States and Europe. The fund could be released next year, the firm said.
In a statement at the end of the exhibition, Al Qudra Real Estate said it had sold out its Amber Tower within 30 minutes. Amber Tower is the first high-rise building within the Shades development at Shams Abu Dhabi. "Amber Tower is Al Qudra's first development targeting both UAE and expatriate end users and investors," said Claus Peter Rees, Al Qudra acting chief executive officer.
Banks and real estate funds at the show reported a rush by clients seeking loans to buy property. Many of them have signed deals with major property developers to secure long-term loans on the spot to facilitate the transactions at the show.
An average 150 customers flocked to each of those stands every day for mortgage loans of up to Dh8 million for a period of 15 to 20 years. Some of them took advantage of the lower interest rates on loans.
"Many of the customers sought long-term loans knowing interest rates are now lower than before following the Central Bank decisions to cut rates," said Afzal Mehmood, sales executive at the National Bank of Abu Dhabi.
"We are now charging 7.25 per cent in interest on these loans but the rate could change during the loan period as it could go up or come down… but at present, the rates are much lower as they exceeded eight per cent last year."
Developers acknowledged property prices had sharply risen over the past two years because of a surge in construction costs, strong domestic demand and other factors. But they noted that return from real estate investment has remained high despite the surge in costs.
"Construction costs have sharply grown over the past one to two years because of higher fees of contractors, and the increases in the prices of fuel and building materials," said Imad Danna, CEO of Al Zorah project.
"But prices of property have also increased sharply… this has offset the rise in construction costs and allowed real estate investors to net high returns. We expect property prices to remain high as there is a strong demand here and thousands of foreigners, mainly from the West, are coming here to buy property. The UAE is becoming a major tourism and investment destination and the main reasons are the lax laws and absence of taxes."
Danna also expected rents in Abu Dhabi and other emirates to remain high in the coming years on the grounds demand far exceeds supply and the bulk of property projects are being built outside the cities. "You can see a big supply in those projects outside the cities but supply is very low inside the existing cities. For this reason, rents inside the cities, mainly Abu Dhabi and Dubai, are expected to remain very high," said Danna.
A report distributed at Cityscape by property services firm Asteco showed apartment rental rates in Abu Dhabi city have soared by 24 per cent over the past 12 months.
Despite a surge in property prices because of strong demand and soaring construction costs, real estate has remained the most profitable sector in the UAE, while developers were surprised at the rush by potential buyers from the UAE and other countries.
Exhibitors at the four-day Cityscape Abu Dhabi described the rush at the sprawling Abu Dhabi National Exhibition Centre as a stampede and some had to cordon off their stands and recruit scores of security men to restore discipline. Besides property companies, banks benefited from the show as hundreds of clients were seen queuing at their stands for mortgage loans.
Most companies did not disclose the exact value of sales made during the show, which was extended by a fourth day yesterday to cope with the rush. But sources of the exhibitors, banks and organisers estimated the combined sales of the more than 200 participants at more than Dh20bn.
"I have talked to people in the biggest exhibiting companies and other firms that reported sales and I can tell you for sure the combined value of sales and pre-sales exceeded Dh20bn," said a source from Abu Dhabi Commercial Bank.
Other sources said total sales surpassed Dh20bn, nearly half of which were announced by Al Zorah city project in Ajman.
Other sales included about Dh1.5bn each by Aldar and Al Qudra, among the largest participants in the show. Hydra sources said sales were worth hundreds of millions of dirhams and involved apartments and villas in the UAE and other countries.
Sorouh, another giant, reported no sales as it only presented projects. "We did not put anything on the market this time but only showed our projects," said Joel Sahli of Sorouh. "Anyway, a large part of our projects have already been reserved and there have been huge sales in the past year."
Organisers estimated that more than 30,000 people visited the show and a large number either bought or booked property.
"During the first three days we recorded more than 26,000 people," said Celine Fenet, Cityscape marketing manager. "We expect more than 4,000 people came on the fourth day although the exhibition opened midday."
Meanwhile, booking clients reported a sharp increase in prices. "I tried to buy property on Reem Island and it was offered to me for Dh4,500 per square foot… this is an astronomical figure compared to last year as it is nearly double now," said Ahmed Fatooh.
The organisation of Cityscape and other property shows in the UAE coincides with a construction boom in the region, where independent estimates expect real estate and construction project to exceed $1 trillion (Dh3.67trn) in five years. The UAE is recording one of the highest rates of construction activity in the Middle East given the sharp rise in liquidity and strong domestic demand.
According to economists, the construction sector has grown by at least 20 per cent over the past five years and is poised for high growth in the coming years. They cited an upsurge in the economy due to strong oil prices, a relaxation of property ownership laws for foreigners and the absence of taxes as the main reasons for the growth.
The massive wealth of some property developers has also prompted them to push into new markets as far as Mexico.
"We have invested in Mexico and are planning to expand such investments to other countries. In Mexico, we are constructing residential housing units in Mazatlan on the Pacific coast while we are about to launch another property project in Lahore, Pakistan, involving houses and offices," said Mohammed Al Habech, commercial director at the Abu Dhabi-based Hydra.
"In the UAE, we are involved in numerous projects. During this exhibition most of the units in the projects we presented were sold out. These include apartments and villas on Reem Island, the Twin Towers in Dubai and other units."
An official from Aldar, one of the largest property developers in the Middle East, said sales included units from Al Dana twin towers at Al Raha beach at the entrance to Abu Dhabi city, Al Khubeira apartments and villas, Al Zeina flats and Munerra apartments. "Most of them, if not all, were sold out. Despite the large increase in prices, the demand is stronger than ever," said Osama Ghannoum, sales manager at Aldar.
Besides massive sales at the show, Aldar announced plans to launch a $1bn real estate fund to push expansions and acquisitions in the United States and Europe. The fund could be released next year, the firm said.
In a statement at the end of the exhibition, Al Qudra Real Estate said it had sold out its Amber Tower within 30 minutes. Amber Tower is the first high-rise building within the Shades development at Shams Abu Dhabi. "Amber Tower is Al Qudra's first development targeting both UAE and expatriate end users and investors," said Claus Peter Rees, Al Qudra acting chief executive officer.
Banks and real estate funds at the show reported a rush by clients seeking loans to buy property. Many of them have signed deals with major property developers to secure long-term loans on the spot to facilitate the transactions at the show.
An average 150 customers flocked to each of those stands every day for mortgage loans of up to Dh8 million for a period of 15 to 20 years. Some of them took advantage of the lower interest rates on loans.
"Many of the customers sought long-term loans knowing interest rates are now lower than before following the Central Bank decisions to cut rates," said Afzal Mehmood, sales executive at the National Bank of Abu Dhabi.
"We are now charging 7.25 per cent in interest on these loans but the rate could change during the loan period as it could go up or come down… but at present, the rates are much lower as they exceeded eight per cent last year."
Developers acknowledged property prices had sharply risen over the past two years because of a surge in construction costs, strong domestic demand and other factors. But they noted that return from real estate investment has remained high despite the surge in costs.
"Construction costs have sharply grown over the past one to two years because of higher fees of contractors, and the increases in the prices of fuel and building materials," said Imad Danna, CEO of Al Zorah project.
"But prices of property have also increased sharply… this has offset the rise in construction costs and allowed real estate investors to net high returns. We expect property prices to remain high as there is a strong demand here and thousands of foreigners, mainly from the West, are coming here to buy property. The UAE is becoming a major tourism and investment destination and the main reasons are the lax laws and absence of taxes."
Danna also expected rents in Abu Dhabi and other emirates to remain high in the coming years on the grounds demand far exceeds supply and the bulk of property projects are being built outside the cities. "You can see a big supply in those projects outside the cities but supply is very low inside the existing cities. For this reason, rents inside the cities, mainly Abu Dhabi and Dubai, are expected to remain very high," said Danna.
A report distributed at Cityscape by property services firm Asteco showed apartment rental rates in Abu Dhabi city have soared by 24 per cent over the past 12 months.
/Emirates Business24/7/
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