Residential apartment and villa rents in Abu Dhabi continued to decline in the second quarter with some of the highest drops seen since last year, according to Asteco.
The emirate’s real estate market has suffered over the last two years due in part to redundancies and falling accommodation allowances linked to the oil price slump.
The real estate consultancy said apartment rents were down 2 per cent and villa rents 4 per cent from the first to the second quarter. Year-on-year they were down 10 per cent and 9 per cent respectively.
Rates for units ranging from studios to three-bed apartments declined 1-5 per cent over the quarter and 5-18 per cent over the course of the year.
The market also saw some of the highest drops in the villa rental market since the second quarter of last year, with rates declining 14 per cent in Golf gardens and 13 per cent in Al Raha Gardens.
Similar declines were noted by Asteco and other real estate consultancies in the first quarter.
Sales prices in the apartment market were “relatively stable” over the quarter but recorded an annual decline of 8 per cent, according to Asteco.
The average fall for villa was 4 per cent in the second quarter, while Abu Dhabi as a whole saw price declines average 2 per cent.
“Abu Dhabi remained sluggish, with noticeably low uptake of larger high-end properties,” said Asteco managing director John Stevens.
“However, off-plan projects with attractive rates and flexible payment plans continued to generate interest.”
Around 1,000 residential units were completed during the second quarter with the majority of new supply located on Al Reem Island.
Asteco said a further 5,800 are scheduled for handover this year across locations such as Al Reem, Saadiyat Island, Yas Island, Al Raha Beach and Rawdhat and mainland Abu Dhabi.
Typically though new supply falls well short of scheduled deliveries as developers delay handovers.
Office demand also “remained tepid” with generally low uptake but better performance in some free zone areas, where occupancy stood at up to 95 per cent.
The consultancy said villa rates fell an average of 7 per cent in Al Ain from the first quarter and 12 per cent annually.
Larger four and five-bedroom units saw a more pronounced drop.
Prime compounds performed better due to their close-to-full occupancy rates and apartment rents were down 2 percent on average but some established communities bucked he trend.
Stevens said residents in Al Ain were shifting towards self-sustained communities with supporting facilities rather than standalone buildings.
“To attract and retain tenants, landlords continue to offer incentives including up to one month of free rent and flexible payment terms of up to 12 cheques,” he said.
There were no handovers recorded in Al Ain in the second quarter despite several being scheduled. These are now expected by year-end.
Foreign residents across Abu Dhabi are gearing up for an increase to a tax on property rental contracts first announced in 2016. The increase from 3 per cent to 5 per cent could see landlords reduce rates further to attract tenants, according to some agents.