The Abu Dhabi real estate market continued to be impacted by the economic slowdown in the capital in the second quarter of 2016 with declines seen in both sales and rental rates, according to property agency Chestertons MENA.
In its Q2 report, the firm said apartment rents were down 2 per cent compared to the first quarter with average lower range annual leasing rates of Dhs40,000 and Dhs52,000 for studio and one-bedroom units respectively.
Average two-bedroom apartment rents in Al Reef Downtown and one of the most expensive locations Al Bandar were also down Dhs2,000 to Dhs108,000 and and Dhs 193,000 respectively.
“On average the residential rental market has dropped by 2 per cent with the luxury end of the segment bearing downward pressure due to a reduction in spending, compounded by cuts to government spending due to lower oil prices. The remainder of the year will see marginal declines however solid yields will still prove popular with investors,” Declan McNaughton, managing director UAE, Chestertons MENA.
Similarly villa rents declined during the quarter with rates varying from Dhs105,000 for an entry level three-bedroom villa to Dhs145,000 and Dhs175,000 for four- and five-bedroom villas in the same category.
Villas rentals range from Dhs148,000 in Al Reef to Dhs183,000 in Khalifa City and Dhs335,000 in Saadiyat Island, according to the firm.
Sales prices also declined 1 per cent during the quarter, with the average price per square foot in the capital around Dhs1,340 for apartments and Dhs1,088 for villas.
Decreases were seen in Al Zeina, down from Dhs1,520 to Dhs1,495 psf, and Al Reef Downtown, from Dhs930 to Dhs925 psf, with both areas returning to prices last seen in the fourth quarter of 2015.
One exception to the trend was Al Reef, where villas prices remained unchanged at Dhs1,010 psf. Al Raha Gardens and Khalifa City also saw minimal changes at Dhs985 and Dhs840 respectively but Saadiyat Island declined to just shy of Dhs1,600.
“We’ve seen a marginal decrease this quarter and once again the rate of decline variance among the communities demonstrated mixed sentiments in terms of sale price. The addition of new units delivered this past quarter and a further 3,500 expected by the end of the year will result in marginal fluctuations during this period of consolidation,” said McNaughton.
Despite the gloom, Chestertons argued yields still remained high at 5 per cent on average across the city and 8.8 per cent, 7.7 per cent and 7.5 per cent for apartments in Al Reef Downtwon, Al Ghadeer and Al Muneera respectively.
Last month, consultancies JLL and CBRE said their were noticeable signs of price declines in the Abu Dhabi market, which has been hit hard by job cuts linked to low oil prices.