Abu Dhabi – Mubasher: Apartment rental rates dropped 3% quarter-on-quarter in the first three months of 2017, and 8% over the last twelve months, according to a recent report.

A combination of reduced public spending, business contraction, a reduction in staff benefits, and the continued delivery of new housing units have placed downward pressure on rental rates and sales prices across Abu Dhabi’s real estate sectors, according to Asteco’s Q1 2017 Abu Dhabi market report.

The decline of villa rental rates was limited to 5% over the last twelve months and 2% for Q1, attributed to low demand and limited availability of quality units. In some communities, the decrease reached up to 12%.

Apartment sales prices decreased by 2% on a quarterly basis and 4% on a yearly basis, while villa sales prices declines 2% and 5%, respectively, partly driven by new supply.

In the commercial sector, rents fell 10% compared with Q1-16 and 2% over the quarter, restricted by limited number of units available for sale.

“The low oil price continues to weigh heavily on the capital’s property market, as the government continues to cut spending, at a time when a significant amount of new supply is ready to be delivered. This quarter has underscored the existing trend that 2017 will be challenging,” managing director of Asteco John Stevens stated.

Nonetheless, existing and off-plan developments with unique selling points in desirable locations, such as Saadiyat Island, have bucked the trend and recorded particularly healthy demand. Rental rates in the area have proven more resilient due to the limited supply and general appeal of the area, according to a statement.