Conflicting headlines and confusion about what is happening in the different property markets in the UAE have in recent months caused concern and uncertainty for both buyers and sellers.

Whilst in other emirates projects have been placed on hold and banks have reduced their lending, here in the UAE Capital master developers have stated that released projects are currently still on track. In addition, contrary to popular market belief, it is our experience that mortgage finance remains available with banks prepared to lend on qualifying Abu Dhabi property.

The real driver for residential property at the moment is the level of demand for early completion end-user stock, either for the owner occupier or the potential landlord. If we take as an example a 2 bedroom apartment in Tala Tower, due for completion at the end of 2009, this can currently be purchased for AED 2,321,900. In today’s market, it is reasonable to expect that this would attract a rent of AED 250,000 per annum. If the rent fell by 20% to AED 200,000 per annum the gross yield would still be in excess of 8%. For an investor or owner-occupier taking 80% finance for this unit at a rate of 8.25%, annual mortgage repayments would be AED 175,747.

Longer term, it is also important to remember that, historically, off-plan property maximises its price potential close to completion when buyers can either move in or start realising a rental yield quickly. Buyers currently looking to invest recognise this and what we are seeing now in Abu Dhabi is some maturity coming into the market – speculative investors who over-committed are now considerably reducing their asking prices, making some of these deals attractive to those in a position to take advantage.

This is no bad thing as every successful market has a backbone of solid investors who take a longer term view, buying to earn a good rental yield from their investment as a landlord. Abu Dhabi has always offered the potential to provide significant returns and, in our view, continues to do so.

Jane Woods is Director of Business Development, LLJ Property