Rents and prices set to fall further in Abu Dhabi in 2017
Average residential rents and property prices in Abu Dhabi fell in 2016 and further declines are likely in 2017 due to new supply coming onto the market, the latest analysis report suggests.
Apartment rents fell by 7% on average year on year and villas rents were down by 5% while average sale prices for both apartments and villas were down 4% over the year, according to the data from real estate consultancy Asteco.
New supply will put pressure on rents with the 1,400 residential units handed over during 2016 due to be expanded by 4,000 units, 2,700 apartments and 1,360 villas, which are expected to be handed over this year.
‘Residential units that were previously able to maintain rental levels due to the reluctance of existing tenants to move, are now more likely to be affected as residents in search of the best value-for-money will become more frequent,’ said John Stevens, Asteco managing director.
‘High profile corporate mergers in the pipeline are expected to lead to increased job uncertainty and could affect employee benefit packages, including housing allowances over the next few years, raising the potential for softening demand and therefore declines in market rates,’ he added.
A breakdown of the figures show that average apartment rents fell by 7% over 2016, whilst prime and high-end apartments declined by 6% and 9% respectively year on year. Villa rents declined by 5% on average in 2016, with the greatest decrease witnessed in the Al Raha Beach area with a fall of 10%.
‘Mature villas, which previously recorded high rental rates, have been affected the most, which resulted in an increase in vacancies in some communities,’ Stevens pointed out.
Apartment sales prices decreased by 4% on average in 2016 and villa prices were also down by 4%.
‘The anticipated delivery of new residential projects is expected to increase investment opportunities, which in turn will have a positive effect on transaction volumes. Off-plan projects offering attractive sales rates and payment plans will continue to achieve good demand levels,’ Stevens concluded.