Developers back affordable housing



ABU DHABI // The big development companies, some of which admit they helped fuel the capital's property crisis, have turned their attention to so-called affordable housing. The developers, which include Aldar and Sorouh, said yesterday that they will "reassess" planned luxury developments and identify areas of the emirate where they can build homes for middle-income groups. "The Government, Aldar and Sorouh and other developers are working to create areas that are not such premium locations where we can build affordable housing," said Charles Acworth, the director of research and head of commercial leasing at Aldar. Mr Acworth said homes would be aimed at people who earn about Dh25,000 (US$6,800) a month, who could afford to raise a mortgage on a property worth about Dh1.2 million. "That's the sort of product that needs to come to the market," he said. "We haven't changed our focus in the slightest. We have always wanted to do affordable housing." The change of attitude ahead of next month's Cityscape Abu Dhabi conference marks a notable shift from last July's launch of glitzy high-rise towers at the same event. Since then average prices have dipped by about 25 per cent, and sales have all but dried up because of the limited availability of home finance, and higher interest rates of about nine per cent. Several companies have admitted they rushed to sell luxury homes at inflated prices and feed a speculator-driven bubble that could not last. Developers bear partial responsibility for the slump for "not paying attention to the market's genuine needs", said Adel al Zarouni, the managing director of Burooj Properties, which is building residential towers on Reem Island. "We [developers, financiers and investors] all participated in fuelling what led to this crisis," he said at a breakfast briefing organised by Cityscape Connect. "Developers were rushing to announce projects here and there without thinking about a property market study, a needs study, a pricing study, just because we were in a race. Everybody was trying to catch up and announce projects at ridiculous prices that stimulated the way the crisis developed. "As we have all participated in creating that bubble, we must all put plans together to sort out this problem. We have, as developers, a role to play. Projects that are announced must meet the genuine demand. They must be designed with the buyer in mind." Mr al Zarouni also criticised investors for "buying properties like potatoes" instead of carefully considering factors such as the location of their purchase, the floor layout and the expected build quality. Guy Sadler, the chief executive of Profile Group Properties, a company with office and residential projects under construction in Abu Dhabi, said developers had been guilty of enticing speculators by forecasting rapid price growth that would yield large profits. "Speculation was courted, not pariahed," he said. Members of the public attending the breakfast briefing demanded that developers justify setting prices exceeding Dh2,000 per square foot for units launched at Cityscape last summer. The majority have seen their properties sink well below what they paid. Gurgit Singh, chief property development officer at Sorouh, said he "would be lying" if he denied that house prices had been driven unnaturally high. rditcham@thenational.ae

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