Rental prices for apartments and villas in Abu Dhabi fell between 7%-15% in the second quarter of 2010, with lower-quality properties seeing the most pronounced drop, according to the latest report from Asteco. The decline in rental prices for apartments in Q2 was similar to that witnessed during the first quarter of this year and that trend is likely to continue throughout 2010 as more supply comes onto the market, the property services company said.
The report estimates that 4,500 apartments are in the process of being delivered in the emirate, with an additional 8,000 flats due for completion by the end of this year.
‘The Abu Dhabi real estate market is in a period of transition moving away from an under-supplied landlord-controlled market to one with improving quality and choice offering tenants more negotiating power,’ said Asteco Property Management CEO Elaine Jones. ‘These changing market dynamics will continue to put downward pressure on rents, particularly older stock, which should be interpreted as a healthy move for an improvement in business.’
In terms of new property, most of the high-end supply will be concentrated on Reem Island and Al Raha Beach, with mid-end supply coming up on the Abu Dhabi main island and more affordable lower end stock on the mainland, which includes the first phase of Al Reef Downtown, the report said.
Rental prices for villas in the emirate also continued to slide, the report said, with traditional UAE national-owned investment villas slipping 2%-8% in the second quarter, whereas more significant declines of up to 20% were seen in five bedroom expatriate-owned villas in Al Reef, clearly highlighting a desire to achieve occupancy to cover property expenses.
Overall, across central areas as well as master-planned communities such as Al Raha Gardens and Sas Al Nakhl, three and four-bedroom villas have in some cases maintained their rental yields due mainly to prices falling within range of a typical housing allowance. With new supply coming online in Khalifa City and Mohammed Bin Zayed City, the lower-end of the market has corrected the most with rental reductions from 5-15%, says Asteco.
In terms of sales, on average, prices for apartments have remained unchanged and demand continues to be entirely focused on those developments close to completion, Asteco said.
“Sales activity was relatively flat, but with the first phases of Reem Island and Al Raha Beach completing, we anticipate improved demand from owner-occupiers. Quality will be the catalyst and Al Bandar at Raha Beach is likely to be the most sought after place to live in Abu Dhabi,” said Paul Maisfield, General Manager of Asteco’s Abu Dhabi office.
Meanwhile, no significant fluctuations in villa sales prices were seen in the last quarter due to a number of contributing factors, such as low levels of transactions and UAE nationals enjoying good rental returns from their investment properties, the report said.
“There is a gap in the market for good quality, value-for-money villas in master planned communities that are available for sale to expatriates. Most existing compounds suffer from high density levels with limited retail, recreational facilities and open space,” added Maisfield.
In terms of the office market in the emirate, it witnessed a limited number of open market transactions in the second quarter, with the majority of bulk leasing being taken up by the government. However, the amount of activity was higher than the previous quarter, with many companies examining relocation options for better quality, layout and parking, the report noted.
Tuesday, July 13- 2010 @ 11:10 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.