Dubai real estate developer Sobha Realty has entered Abu Dhabi by launching a Dh40 billion ($10.9 billion) residential project, with its managing director expecting the long-term impact from the Iran war on the UAE property market to be minimal.
Sobha City, spread across 38 million square feet, will feature 4,000 apartments and 2,500 villas when fully complete. Located in Al Bahiya – near Zayed International Airport and Yas Island – the project also features a two-kilometre waterfront promenade with a mall, retail spaces, mosques, a par-3 golf course designed by Australian former professional golfer Greg Norman, three schools and healthcare complexes. The project will have 50,000 trees, with 60 per cent of the master plan featuring open and green spaces, according to Sobha.
It will be developed in phases, Sobha executives said on Monday. The first phase, now on sale, will include about a third of the units, with handover scheduled for the fourth quarter of 2029.
Prices start at Dh1.31 million for a one-bedroom apartment and Dh4.96 million for a villa.
The launch of the project reflects the strong demand in the UAE capital, Francis Alfred, Sobha's managing director, told The National.
“People are waiting for such a development, and we see a lot of local buying because we are already seeing that interest, and we also made sure that delivery is not compromised,” Mr Alfred said. “We're going to hand over the development in 2029, which also brings a lot of confidence to people.”
Limited impact
Mr Alfred also stressed that he believes the long-term effect of the 40-day war on the UAE property market will be limited.
“We all believe that this is a short-term problem,” he said. While the company recorded a sharp drop in sales and enquiries as soon as the war began, numbers began to slowly pick up after the first week, Mr Alfred said.
“But then it [the war] was prolonging. The moment the ceasefire [between the US and Iran] was announced, things started picking up again. That's a very good sign,” he said.
During the one-month war period, sales and enquiries were down to about 20 per cent to 25 per cent of the levels prior to the war, but the ceasefire announcement led to a two-fold improvement.
“So that means people don't have a problem with the long-term prospects … you're only looking at, 'is it the right time to put in the money?'” he said.
“When you look at a city's growth, you can't look at a few quarters or few years, we always look at least one or two decades.”
The property market follows a cyclical pattern, and while the war will create a “dent” in the short term, it is not like other cycles, Mr Alfred said.
“This cycle is a forced stop. It is not a natural demand-supply cycle, which is good news. So the [external] force will go out, and the cycle should come back to its normal shape,” he said.
While some companies are getting affected in this dip, “Sobha has a strong financial foundation”, according to Mr Alfred.
“We have done extraordinary sales in the last couple of years. Even if we do full-steam construction, we have a revenue backlog for three years,” he said. “We have a land bank close to four plus years, almost paid up. So we don't have any concern … we have a good cash balance.”
Abu Dhabi property surge
Abu Dhabi is recording a surge in its property market, with demand continuing to rise due to continued economic growth and the government's diversification strategies.
The total value of real estate transactions rose by 44 per cent on an annual basis to Dh142 billion last year, while the volume climbed by 52 per cent to 42,814, the Abu Dhabi Real Estate Centre (Adrec) said in February.
The emirate generated Dh99.4 billion in property sales and purchase activity, with volumes reaching 25,604 in the category.
Sobha, which has projects in Dubai and Umm Al Quwain, is offering extremely “attractive” pricing for the units in its new Abu Dhabi project, Mr Alfred said.
He stressed that the lower price points have nothing to do with the war, but are being offered only because it is the developer's first master development in Abu Dhabi.
The master plan also includes 80 exclusive mansions at the golf course, which will be launched at a later phase, the company said.
In Abu Dhabi, Sobha expects 60 per cent of the investors to come from the UAE and 40 per cent from international markets. Outside the country, it is seeing interest from markets such as the US, Canada and Europe.
Abu Dhabi's market remains “strong” and “if you look at the population increase, the demand for residential units and the supply, it is always a positive curve”, Mr Alfred said.
