Why is Abu Dhabi residential Market oversupplied? Time to rent cheap?
Previously we reported that the Dubai rent market had been slowly going down.
Throughout 2017, many Dubai tenants had been looking for cheaper places, and several were getting them at a high discount.
This is a fact that applies to Abu Dhabi as well.
The reason is that “There’s a lot of empty properties, in the UAE capital,” said John Stevens, Managing Director of Asteco’s Abu Dhabi first quarter Real Estate Report 2018.
Approximately 1,600 residential units were delivered in the first quarter of 2018 with the bulk (more than 75%) located within Investment Zones, including, Yas Island, Al Reem Island, and Al Raha Beach.
Stevens added; “Although healthy demand for high-quality, off-plan and newly delivered projects continued, lower-end residential units remained under pressure throughout the first quarter of 2018.”
Apartment and villa rental rates recorded decreases of 3% and 2% respectively in the first quarter of 2018 and an annual drop of 11% and 9%, according to Asteco’s Abu Dhabi, first quarter 2018, Real Estate Report.
Al Reef was the only community recording a drop in villa sales prices at an average rate of 2%.
The first quarter of 2018 saw the launch of several new projects; over 2,500 units on Al Reem Island, 1,800 on Yas and Saadiyat Islands, including West Yas, Jawaher Al Saadiyat and Maamsha Al Saadiyat, and more than 1,650 units on the Abu Dhabi ground.
These will create a new supply of residential units, and add to the glut.
Studios to three-bedroom apartments reported declines 4%-17% over the course of the year, the dip in villa rentals was less pronounced, ranging from 6% to 11%.
Room service, please
According to a recent report by Jones Lang LaSalle (JLL), a prominent real estate advisory, the hospitality market in Abu Dhabi registered a 5% increase in occupancy levels in the first quarter of 2018.
And according to the Abu Dhabi Tourism & Culture Authority, the number of guests staying at hotels in the emirate earlier this year rose by 15% (around 400,000) compared to last year.
This increase was in part driven by visas now being granted on arrival for Chinese visitors, Abu Dhabi’s largest overseas source market, ahead of India and the UK.
“The notable increase of Chinese visitors is supported by Abu Dhabi’s Department of Culture and Tourism Authority’s investment into Baidu, the Chinese equivalent of Google, which commenced at the end of 2017,” said Peter Stebbings, Head of Abu Dhabi operations.
“Attractions such as the opening of The Louvre Museum continued to boost visitor numbers from France,” he added.