Abu Dhabi’s real estate market continued its negative trend in the third quarter as rental rates and sales declined up to 10 per cent year-on-year for some categories, according to a new report.
Consultancy Asteco said weak job growth and reduced housing allowances were still weighing on the market during the quarter, with supply also remaining a concern from its last report.
Apartments rents were down 3 per cent over the quarter and 10 per cent year-on-year on average, according to the firm, with declines over the last 12 months as high as 15 per cent at the corniche.
Sales prices for apartments also declined 3 per cent quarter-on-quarter and 10 per cent year-on-year. The highest yearly declines were in Al Muneera and Reef Downtown (-12 per cent) with quarterly declines led by City of Lights (-8 per cent) and Sun and Sky Towers (-6 per cent).
Asteco noted on top of subdued market conditions there has also been significant increase in new apartment supply this year, with 2,750 units completed across the emirate since the beginning of 2017 compared to 1,350 for the whole of 2016.
Around 800 units were delivered in Q3 and a further 1,500 are scheduled for handover by year-end, it said.
“We are experiencing a weak labour market with reduced employment opportunities and a tightening of housing allowances,” said John Stevens, managing director of Asteco.
“This, together with additional supply since 2016 has led to increased vacancy rates which we expect to continue into 2018. Landlords are discounting rents and offering flexible payment terms, (up to 12 cheques) to retain existing tenants and secure new leases.”
For the villa market, rents were down 3 per cent quarter-on-quarter and 6 per cent year-on-year. Al Raha Gardens saw the largest rate decrease during the quarter (-7 per cent) and Hydra Village saw the largest decline year-on-year (-9 per cent).
The firm said the supply situation was similar in the villas market with roughly 550 units completed this year compared to “only a small number” last year. A further 250 are due for delivery by year-end.
“Rising vacancy rates have been experienced in many villa communities as tenants opted to downsize to smaller or more affordable properties, whilst some even transitioned to apartment units to reduce their accommodation expenses,” Stevens added.
Elsewhere, he indicated there had also been 5 to 10 per cent rate declines within several grade A and B buildings in the emirate’s office rental market despite rates remaining largely unchanged during the quarter.