Abu Dhabi Saadiyat pads need more than Louvre opening to lift prices

Prices remain under pressure on Saadiyat Island despite the opening of the Louvre Abu Dhabi in November of last year. (Shutterstock)
Updated 11 April 2018
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Abu Dhabi Saadiyat pads need more than Louvre opening to lift prices

  • Despite the opening of the Louvre on Saadiyat Island in November, prices remain under pressure according to Cluttons even as the sider market shows signs of stabilization.
  • The cost of buying the luxury Saadiyat properties had fallen significantly since 2015, with prices dropping by an average of 26.1 percent.
London: Abu Dhabi’s top addresses on Saadiyat Island have shed more than a quarter of their value since 2015 new research has found.
Despite the opening of the Louvre on the island in November, prices remain under pressure according to Cluttons even as the sider market shows signs of stabilization.

Sea-facing villas on Saadiyat Island, which are some of the most expensive in the emirate at 1,700 dirhams ($463) per square foot, have seen no movement in prices for the past two consecutive quarters, Cluttons found.
The cost of buying the luxury Saadiyat properties had fallen significantly since 2015, with prices dropping by an average of 26.1 percent, Cluttons said, as the emirate’s economy faltered due to declining oil prices.
Faisal Durrani, head of research at Cluttons, said confidence in the economy is starting to return, encouraging buyers to invest in property again.
“2018 looks set to be a better year for the UAE economy as a whole, with GDP expected to expand by 2.6 percent, from a seven year low growth rate of 1.7 percent last year. This is, in turn, expected to help support more stable rates of job creation and increased government spending as confidence levels improve,” he said.
He added that news at the end of last year that the national oil company Adnoc was planning to spend 400 billion dirhams over the next five years to boost growth is likely to further bolster economic growth.
Edward Carnegy, head of Cluttons Abu Dhabi, said the stabilization of prices is likely to continue this year. “In fact, we have noted a marginal uptick in demand from Emirati buyers predominantly, looking for second homes, or expanding their buy-to-let investment portfolios on Saadiyat Island,” he said.
Other property experts are also noting that the market is beginning to stablize.
Taimur Khan, senior analyst at Knight Frank said: “The short term trends seems to be that the residential market is improving but we are still very likely to see further price falls across the market in 2018. Economic activity in the capital is beginning to recover both in the oil and non-oil sector and this may help spur demand and support the market somewhat.”
Rents across Abu Dhabi’s residential areas have decreased by 2.3 percent in the first quarter of this year, marking a slower rate of decline that the 4.3 percent drop during the final quarter of 2017.
This means rents are 11.5 percent lower than this time last year.
The Cluttons report said that the continued decline in rents reflects some lingering concerns among tenants about potential job losses coupled with the rising cost of living. The introduction of value-added tac (VAT) at the beginning of the year and the increase in inflation, has placed additional pressure of household budgets.
Tenants are more likely to attempt to negotiate more favorable rates with their landlords, said Carnegy.
“As a result, tenants are negotiating reductions at renewal, while landlords are increasingly receptive to meeting the expectations of tenants by agreeing to close deals below headline asking rates, and they are offering flexible rental payments in multiple cheques to attract tenants as well as other incentives such as zero commission payable and rent free,” he said.


Tesla rolls out Model 3 in China ahead of schedule in sales push

Updated 52 min 9 sec ago
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Tesla rolls out Model 3 in China ahead of schedule in sales push

  • The initial deliveries will go to customers who placed their orders before the end of 2018
  • Tesla currently imports all the cars it sells in China, but is in the process of building a factory in Shanghai

BEIJING/SHANGHAI: Tesla has started delivering Model 3 cars in China slightly ahead of schedule, as it looks to revive its sales that have been hit hard by Sino-US trade tensions.
The California-based firm has already adjusted prices and added a cheaper Model 3 variant to its line-up to make its US-made cars more affordable in China amid high import tariffs.
The US luxury electric vehicle said in a statement that it held a delivery event in Beijing on Friday which “marked a significant milestone for the market.”
It had initially projected a March start for Model 3 deliveries in China — the world’s biggest auto market where overall car sales contracted in 2018 for the first time in more than two decades.
The initial deliveries will go to customers who placed their orders before the end of 2018, Tesla said. Buyers that ordered this year will start receiving their cars from end-March.
“I see its earlier-than-expected delivery as an effort to try and seize the market as quickly as possible” amid mounting competition, said Alan Kang, an analyst at LMC Automotive.
“Many of its potential customers will not only be considering Tesla’s Model 3 but also other electric car models like Jaguar’s I-PACE or that from Audi and Mercedes-Benz,” the Shanghai-based analyst added.
While auto sales in China have waned as the economy slowed, Tesla’s business was hit hard after Beijing raised tariffs on US auto imports to 40 percent in July amid the trade tensions. China has since temporarily suspended the additional 25 percent tariff, reducing it to the 15 percent level.
Tesla currently imports all the cars it sells in China, but is in the process of building a factory in Shanghai that will manufacture Model 3 cars in the initial phase and help it minimize the impact of the trade war.
The United States and China are in the midst of talks aimed at resolving their trade dispute. If the two sides fail to reach an agreement by March 1, US tariffs on $200 billion worth of Chinese imports are set to spike to 25 percent from 10 percent.
Tit-for-tat tariffs between the world’s two top economies have upended international trade flows.
Tesla’s earlier-than-scheduled delivery, however, comes as the automaker was dealt a setback on Thursday after Consumer Reports, an influential US magazine, withdrew its endorsement for Model 3, citing reliability problems.
The magazine’s decision to withdraw its endorsement, less than nine months after recommending the electric sedan, raised questions about quality that Tesla has faced since the Model 3’s difficult launch.