Abu Dhabi – Mubasher: Real estate prices in Abu Dhabi have continued to undergo pressures due to “unfavourable macroeconomic conditions”, which have coincided with new supply entering the market, a new report has said.
The property market in the UAE’s capital is seeing new developments and supply in addition to redundancies and companies lowering their leasing rates, while also adding new units to the market. All these factors have reduced average rental rates by 3% for apartments and by 2% in the third quarter of 2018 compared to the second quarter, Chestertons said in its newest report.
“Even the more resilient apartment locations such as Saadiyat were faced with declining rates, admittedly of just 1% overall, with studios and one-bedroom apartments unchanged from Q3,” commented head of consulting at Chestertons MENA Ivana Gazivoda Vucinic.
“This has, however, allowed some tenants to take advantage of the downturn by using the opportunity to upgrade to larger units with better-quality specifications, located in more popular areas,” said Ivana Gazivoda Vucinic, Head of Consulting, Chestertons MENA,” Vucinic added.
Al Reem Island and Al Raha Beach witnessed the “biggest adjustments” in Abu Dhabi’s apartment rental market, the report showed, indicating that the two areas saw a 4% decline, each, in rental prices in a quarter-on-quarter basis.
Compared to Q4-17, which had marked the highest price point in 2017, Al Raha Beach suffered a 30% drop in rental asking prices for studios.
Other areas such as Al Ghadeer, Al Khalidiya, Mohammed Bin Zayed City and Corniche Road saw apartment rents fall by 3%. Moreover, apartments and villa rentals in Al Reem Island declined by 6% in Q3-18, the report titled “Abu Dhabi Market Report Q3 2018.”
“The shift in market dynamics has resulted in several landlords focusing on retaining tenants rather than facing long periods without any rental income, particularly in a market where we’re seeing some tenants moving to save a few thousand dirhams a year on their rental budget,” Vucinic commented.
For the villa market, Al Ghadeer, Khalidiya, and Khalifa City saw no change in rental asking rates between July and September, Chestertons added.
To support the UAE capital’s property market, the Abu Dhabi government announced 50 new initiatives within an AED 50 billion ($13.61 billion) stimulus package. More than AED 20 billion has been allocated as part of the government’s package for 2019.
The Abu Dhabi government is set to play “a pivotal role” in the real estate market’s recovery including initiatives such as the regional and global promotion of the Emirate, Chestertons’ Vucinic noted, highlighting that “until the effects of initiatives such as this are realised, the real estate sector is likely to suffer continued price adjustments into 2019.”
