Average residential rents in Abu Dhabi dropped by up to 10 per cent last year due to the continuing economic uncertainty in the emirate, according to a new report.
While apartment rents dropped by 7 per cent, villa rental rates declines by 10 per cent, the report by property agency Chestertons MENA stated.
“Redundancies and the shrinkage of the oil and gas sector continue to place pressure on the demand in the market,” said Robin Teh, UAE country manager/director Valuations and Advisory UAE, Chestertons MENA.
“Tenants are seeking lower rental rates as housing allowances have been reduced.”
On a quarter-on-quarter basis, apartment rents declined by an average of 1 per cent in Q4, with Al Ghadeer the only area showing no drop. On the other hand, rents in Al Reef Downtown dropped by an average of 3 per cent quarter-on-quarter and 11 per cent year-on-year in Q4.
Apartment rentals in Al Bandar, Al Zeina and Al Reem Island fell by around 8 per cent on average throughout the year, the report said.
Villa rentals dropped by an average of 2 per cent in Q4 compared to Q3, but ‘significant softening’ was noticed across all areas during 2016. Units in Al Reef, Al Raha Gardens and Saadiyat Island witnessed average rental decreases of between 10 per cent and 12 per cent.
“We expect the pressure on rents to remain throughout the first quarter of 2017 with the continuous cost cutting measures and job instability in the current market,” said Teh.
In terms of sales, average apartment prices dropped by 1 per cent in Q4 from the previous quarter, while villa sales prices fell by 2 per cent quarter-on-quarter and 6 per cent year-on-year.
Average yields for Q4 2016 remained stable since Q2 2016 and stayed flat at just above 5 per cent, the report added.
“There is a similar situation in Dubai, with residential sales and rental prices falling and yet yields remaining fairly consistent throughout the course of 2016,” added Teh.