The Abu Dhabi Real Estate Report from Landmark Advisory, which looks at the price correction unfolding in both the freehold and leasehold market shows that prices in the capital are down 15 to 25% on the fourth quarter of 2008.
Also properties being delivered later than 2011 are predicted to see average price falls of up to 10% below what had been expected, the report added.
This was because prices in Abu Dhabi had been benchmarked to the inflate prices seen in Dubai that meant there was little room for inflation before liquidity, according to Jesse Downs, head of research at Landmark Advisory.
'Freehold and leasehold prices spiked after CityScape Abu Dhabi in May 2008 and despite solid demand fundamentals the market could not sustain such high prices in the short to medium term,' he explained.
'Investors and speculators saw Abu Dhabi as the next big thing after Dubai, but by then the financial crisis had already hit the UAE. Launch prices were benchmarked against Dubai's already inflated property values, so there was little room for appreciation even before liquidity dried up,' he said.
At present the emirate's property market was in gridlock because buyers were looking at absolute prices, while sellers were still looking for the original price, he added.
'Due to this incompatibility, sales have ground to a halt. Developers are now facing the prospect of renegotiating payments to prevent defaults and preserving enough cash flow to continue construction,' explained Downs.
The rental market had seen rents grow by 30% and 80% respectively for villas and apartments between Q4 2007 and Q4 2008, the report also said.
However, rents had now stabilised because people had taken other accommodation options such as serviced apartments, house sharing or had moved to Dubai and Al Ain.
