Milestone nears for Saadiyat Island

Saadiyat Island: The first residential projects on Saadiyat Island are ready to open, with the cheapest villas priced at Dh4.9 million.

An artist's impression of the Saadiyat Island, a 27 square kilometre natural reserve being transformed off the coast of the capital's coast. AFP PHOTO/HO

Saadiyat Island will reach a milestone this year when the handing over of homes on the island begins, adding a new player to Abu Dhabi's already competitive property market.

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The projects target the high-end of the market, with the cheapest villas priced at Dh4.9 million (US$1.3m). But there are few buyers for any homes in Abu Dhabi at the moment, especially for uncompleted property, agents say.

"The product is beautiful," said Paul Preston, the managing director of Elysian Properties. "But the only interest I'm seeing is owners trying to exit."

A four-bedroom villa in the Saadiyat Beach development originally purchased for Dh8.2m was recently put on the market for Dh7.9m, Mr Preston said.

In the Saadiyat Beach Villas complex, 255 of the 344 villas have been sold, according to the Tourism Development and Investment Company (TDIC), the master developer for the island.

Only two of the 32 Spanish-style villas in the St Regis-branded residences - which are priced as high as Dh25m, among the most expensive villas in Abu Dhabi - have been pre-sold.

Saadiyat is also planning to add 750 apartments to the market - 259 in the St Regis development and 495 in the Saadiyat Beach Apartments complex.

Average rents in Abu Dhabi have fallen by more than 40 per cent in the past three years as projects come to market.

But the location and quality of the Saadiyat offerings should help leasing activity, agents say.

"There is a lot of stock, but in terms of apartments sector, there is a lot of mediocre stock," said Paul Maisfield, the general manager of Asteco, a property management firm.

The Saadiyat Beach Apartments is designed eventually to include more than 963 apartments, but future phases are likely to be delayed until the market can catch up, said Shaun O'Connor, the chief financial officer for TDIC.

"We probably will not bring more apartments on to the market for an extended period of time because of the amount of supply coming," he said. "We need to fill what we have."

The delay will also give time to build up the community around the residential units, including stores, a mosque and other services, he said.

Villas may also be put on the rental market if they are not sold.

"If we can't sell, we're entertaining leasing," Mr O'Connor said. "But our primary strategy is selling."

So far there has been no sign of any buyer defaults, an issue that plagued some developments sold during the property boom.

"Our buyers are very credible individuals," Mr O'Connor said.

"I'm not concerned from credit perspective on any of the buyers."

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