A tightening credit market and restrictions on buying offplan property have prompted several major developers to consider moving their offerings downmarket.
The move signals a change from targeting the luxury market - a strategy used by the bulk of UAE developers since the start of the region's property boom five years ago - to constructing developments aimed at the middle segment of the market.
Abu Dhabi's Al Qudra Holding is among the first developers to readjust its project portfolio as access to credit becomes tighter and more expensive for homebuyers.
In the light of changing market conditions since the turn of this year, the company altered the design of its Ain Al Fayda community development in Al Ain to cater towards the sale of property to mid-range buyers. Al Qudra launched the project for sale at last week's Cityscape Dubai.
"We were targeting the high-end market at the beginning of the year, but saw the markets and the way they were turning towards the first quarter of this year," said Mahmood Ebraheem al Mahmood, the chief executive of Abu Dhabi-based Al Qudra.
"So we decided to redefine it as more of a mid-range [project]. We will now focus on this part of the market and see how it develops."
Mr Mahmood added that a similar strategy was likely to be applied to some of Al Qudra's future projects.
"Many people are complaining that credit is too expensive," he said. "So we have adjusted our portfolio to not only focus on high-end, but also on the middle segment of the market. But we haven't abandoned high-end, we've just reduced the allocation of investments to that segment."
Mr Mahmood said that the mid-range market provided the company with "a lot of end-users".
Other developers who once only sold to high-end users are also planning to adopt a similar strategy to Al Qudra in a bid to weather the liquidity slowdown.
"The market is moving towards that direction," said Mohammed Sultan al Qadi, the chief executive of RAK Properties.
"Our projects that have not yet been completed are targeting the high-end segment. But for new projects, targeting the middle income and affordable market will be the trend from now on. And for sure, we will be part of this trend. The whole world has changed and we have to change with it."
While developers adjust their strategies to accommodate current market conditions, experts predict that the global financial crisis could lead to a cooling down of the frenzied speculative offplan buying that has principally been responsible for fuelling local property prices.
According to Chris Dommett, the chief executive of the mortgage adviser John Charcol Dubai, both foreign and local investors are being more cautious than usual, and the active offplan market is likely to slow down.
"Investors who buy up property and quickly resell for a profit, otherwise known as 'flipping', have not only been discouraged by the global economic uncertainty, but by recent government action taken to limit the practice," said Mr Dommett.
A report published yesterday by EFG Hermes in the aftermath of Dubai's Cityscape also revealed signs of a cooling market.
The report said that the overall atmosphere at the property show was not as frenzied as in previous years, with investors adopting "wait and watch mentality".
ngillet@thenational.ae
UAE currency: the story behind the money in your pockets
Tips for taking the metro
- set out well ahead of time
- make sure you have at least Dh15 on you Nol card, as there could be big queues for top-up machines
- enter the right cabin. The train may be too busy to move between carriages once you're on
- don't carry too much luggage and tuck it under a seat to make room for fellow passengers
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
David Haye record
Total fights: 32
Wins: 28
Wins by KO: 26
Losses: 4
The Cairo Statement
1: Commit to countering all types of terrorism and extremism in all their manifestations
2: Denounce violence and the rhetoric of hatred
3: Adhere to the full compliance with the Riyadh accord of 2014 and the subsequent meeting and executive procedures approved in 2014 by the GCC
4: Comply with all recommendations of the Summit between the US and Muslim countries held in May 2017 in Saudi Arabia.
5: Refrain from interfering in the internal affairs of countries and of supporting rogue entities.
6: Carry out the responsibility of all the countries with the international community to counter all manifestations of extremism and terrorism that threaten international peace and security
The White Lotus: Season three
Creator: Mike White
Starring: Walton Goggins, Jason Isaacs, Natasha Rothwell
Rating: 4.5/5
UAE currency: the story behind the money in your pockets
Killing of Qassem Suleimani
Types of policy
Term life insurance: this is the cheapest and most-popular form of life cover. You pay a regular monthly premium for a pre-agreed period, typically anything between five and 25 years, or possibly longer. If you die within that time, the policy will pay a cash lump sum, which is typically tax-free even outside the UAE. If you die after the policy ends, you do not get anything in return. There is no cash-in value at any time. Once you stop paying premiums, cover stops.
Whole-of-life insurance: as its name suggests, this type of life cover is designed to run for the rest of your life. You pay regular monthly premiums and in return, get a guaranteed cash lump sum whenever you die. As a result, premiums are typically much higher than one term life insurance, although they do not usually increase with age. In some cases, you have to keep up premiums for as long as you live, although there may be a cut-off period, say, at age 80 but it can go as high as 95. There are penalties if you don’t last the course and you may get a lot less than you paid in.
Critical illness cover: this pays a cash lump sum if you suffer from a serious illness such as cancer, heart disease or stroke. Some policies cover as many as 50 different illnesses, although cancer triggers by far the most claims. The payout is designed to cover major financial responsibilities such as a mortgage or children’s education fees if you fall ill and are unable to work. It is cost effective to combine it with life insurance, with the policy paying out once if you either die or suffer a serious illness.
Income protection: this pays a replacement income if you fall ill and are unable to continue working. On the best policies, this will continue either until you recover, or reach retirement age. Unlike critical illness cover, policies will typically pay out for stress and musculoskeletal problems such as back trouble.
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Results
Stage 7:
1. Caleb Ewan (AUS) Lotto Soudal - 3:18:29
2. Sam Bennett (IRL) Deceuninck-QuickStep - same time
3. Phil Bauhaus (GER) Bahrain Victorious
4. Michael Morkov (DEN) Deceuninck-QuickStep
5. Cees Bol (NED) Team DSM
General Classification:
1. Tadej Pogacar (SLO) UAE Team Emirates - 24:00:28
2. Adam Yates (GBR) Ineos Grenadiers - 0:00:35
3. Joao Almeida (POR) Deceuninck-QuickStep - 0:01:02
4. Chris Harper (AUS) Jumbo-Visma - 0:01:42
5. Neilson Powless (USA) EF Education-Nippo - 0:01:45