Abu Dhabi residential property rents declined significantly year-on-year in the first quarter continuing the capital’s real estate slump, according to agents.
Asteco said apartment and villa rental rates were down 3 per cent and 2 per cent during the quarter and 11 per cent and 9 per cent year-on-year.
This followed a 1-5 per cent slump in the studio to three-bedroom apartment category over the quarter and a 4-17 per cent decline over the course of the year. Villas saw an annual decline of 6-11 per cent, according to the firm.
Managing director John Stevens said the delivery of new units during the period despite a slump in economic growth and subdued market sentiment led to increased vacancies during the quarter.
CBRE similarly noted weak demand and a cautionary approach by occupiers due to the uncertain employment environment.
It said in a report that rents were down 1.6 per cent during the quarter and 10 per cent year-on-year but indicated the rate of decline was slowing.
Completions and sales prices
Asteco indicated 1,600 residential units were delivered in Q1 with more than 75 per cent located in Yas Island, Al Reem Island and Al Raha Beach.
Apartment sales prices during the quarter were mostly unchanged in the majority of locations but Marina Square, Reef Downtown and Sun and Sky Towers saw slumps of 5 per cent, 6 per cent and 6 per cent respectively, it said.
This followed competition from new off-plan developments with attractive payment plans. Al Reef was the only community to see a drop in villas prices (2 per cent on average).
“Although healthy demand for high-quality, off-plan and newly delivered projects continued, lower-end residential units remained under pressure throughout the first quarter of 2018,” Stevens said.
CBRE indicated residential sales prices were down around 1 per cent during the quarter and 5 per cent year-on-year
The most major announcement during the quarter was a joint venture between Aldar and Dubai’s Emaar Properties for the Saadiyat Grove development.
The mixed-use development, due to open in 2021, will feature 2,000 residential units, two hotels, 400 serviced apartments and 130,000 square metres of lifestyle and retail space.
Asteco said more than 7,300 units are scheduled for handover in Abu Dhabi this year, but a number are expected to be delayed until 2019.
CBRE said that it expected new supply of 8,250 units per annum to 2020, totalling roughly 25,000 units.
In the office market, Asteco said demand remained low with an average 2 per cent quarter-on-quarter drop in rents.
CBRE indicated average prime office rates were down 8 per cent on the same quarter in 2017, from Dhs1,750 per square metre to Dhs1,615, and a further decline in rentals and occupancy expected this yea.
In the secondary rates were down 15 per cent to Dhs800 per square metre.
“Abu Dhabi’s commercial office market remains in a contraction phase, with take-up levels suppressed by the lack of leasing activity from the Public Sector and Oil and Gas occupiers, which form the backbone of demand in the Emirate,” CBRE said.
“It is now a heavily tenant led market, with occupiers benefitting from a wide array of options, with landlords willing to offer much more flexibility in their leasing terms to secure tenancies and reduce the risk of long term vacancy rates.”