Challenging market conditions for the Abu Dhabi real estate market in Q2 due to a drop in demand and increase in supply says Asteco
Property prices and rents in Abu Dhabi posted declines in the second quarter of the year as the market continued to see rising supply, a report by consultancy Asteco has found.
Residential apartment and villa sales prices were down by 8 per cent and 4 per cent respectively year-on-year, and 4 per cent and 2 per cent respectively on a quarter-on-quarter basis.
In terms of rents, apartment and villa rates fell 8 per cent and 5 per cent respectively year-on-year, with the quarterly declines at 4 per cent and 1 per cent respectively.
“Approximately 600 apartments were handed over during the second quarter, and more than 2,000 additional units are expected to be delivered over the next six months, placing further pressure on rates,” said John Stevens, managing director of Asteco.
He added: “2017 will continue to be a challenging year for the Abu Dhabi real estate industry.”
Looking at apartment rents, prime, high and low-end properties recorded drops of 3 per cent q-on-q whereas mid-market properties saw a 5 per cent fall.
High-end apartments in Central Abu Dhabi, Corniche and Khalidya/Bateen posted declines of 4 per cent, 2 per cent and 2 per cent respectively. Lower-end properties in the same locations also recorded a 2 per cent decline.
Drops in villa rental rates were more noticeable among the mid-to-low quality products located in Abu Dhabi City and Al Reef, the report found.
Villa rents in Saaydiyat Island, Hydra Village and Mohamed Bin Zayed City remained flat in Q2. In Al Raha Beach, Nayhan Camp/Muroor, Al Raha Gardens and Khalifa City, quarterly declines of 1 per cent were recorded.
In the apartment sales market, activity improved marginally since the beginning of the year since developers offered more competitive rates, said Asteco.
Off-plan developments in popular locations such as Mamshah Al Saadiyat and The Bridges on Reem Island saw “good transactional volumes”.
Declines in sales volumes were seen across the city, with the exception of Marina Square – which remained flat q-on-q. Al Bandar and Al Zeina witnessed a 6 per cent q-on-q softening, while The Gate and Sun & Sky Towers posted declines of 2 per cent and 3 per cent respectively during the same period.
In a year-on-year basis, Hydra Avenue (City of Lights) and Saadiyat Beach Residences saw the biggest decline in sales prices at 13 per cent and 11 per cent respectively, with Al Muneera and Reef Downtown following at 10 per cent.
“Several prime and high-end projects such as Jawaher Al Saadiyat on Saadiyat Island and Marina Sunset Bay (behind Marina Mall), were launched and recorded good levels of demand due to the overall lack of quality villa developments in Abu Dhabi,” said Stevens.
“In addition, new projects on Yas Island and Saadiyat Island continue to achieve strong demand, supported by existing and planned demand drivers such as schools, leisure facilities and commercial hubs,” he added.