Abu Dhabi Rents To Drop By 10%

Increasing supply in the emirate’s property market will continue to force rents and sale prices to fall, says new report.

Rents and sale prices in Abu Dhabi are expected to drop between two and 10 per cent across different properties as new supply enters the market, states a new report by property advisor Tasweek.

“The real estate sector is expected to continue moving further in favour of tenants and occupiers after the delivery of an additional 2,900 residential units in Q2 2012,” the report said.

Total stock in the emirate currently stands at around 199,800 units.

According to Tasweek, average rent prices at Al Reem Island, a preferred residential location, currently stand at Dhs90,000 for studios, Dhs100,000, Dhs120,000 and Dhs160,000 for one, two and three bedrooms respectively.

Tenants are seeking good deals at Muroor Road, where rents range from Dhs50,000 to Dhs85,000, the report added.

In terms of commercial space, Al Maryia Island has the highest rental rates at around Dhs2,600 per square metre.

In neighbouring Dubai, although there are signs of recovery in some prime locations, new supply could lead to a price decline, said Tasweek.

Non-prime and less popular areas in the emirate have seen a price drop of between two and five per cent since the second quarter of this year, the report added.

Currently, Dubai International Financial Centre (DIFC) commands the highest average annual rents in the emirate, at Dhs75,000, Dhs80,000, Dhs110,000 and Dhs230,000 for a studio and one, two and three bedroom units, respectively.

Rates are also high in Downtown Dubai, with rents ranging between Dhs50,000 and Dhs180,000.

Best bargains for tenants are available at International City and Dubai Silicon Oasis, the report added.

For commercial properties, rents are again highest in DIFC, while Jumeirah Lakes Towers offers the lowest rental rates at Dhs535 per sqm.

Real estate recovery along with rising supply is pressurising property prices in both Dubai and Abu Dhabi.

“Financial obligations and return on investments will be the dominant factors towards market growth through the end of 2012,” said Tasweek.

Real estate investors are also increasingly eyeing bargains in Europe because of the region’s economic problems, said Masood Al Awar, Tasweek CEO.

“The expected shift in demand to distressed Eurozone countries could further impact the UAE market,” he added.