Abu Dhabi apartment and villa rental rates fell 3 percent and 2 percent respectively in Q1 2018, representing an annual drop of 11 percent and 9 percent, according to a new report from Asteco.
According to the property management firm, studio to three-bedroom apartments reported declines of between 1 percent and 5 percent over the quarter, and 4 percent to 17 percent over the course of the year.
The dip in villa rentals, however, were less pronounced, ranging from 6 percent to 11 percent.
“As a result of the delivery of new supply during a period of restrained economic growth and subdued market sentiment, we have seen an increase in vacancy rates across all residential unit types," said John Stevens, managing director, Asteco.
In its report, Asteco noted that approximately 1,600 residential units were delivered in Q1, more than 75 percent of which were located within investment zones such as Yas Island, Al Reem Island and Al Raha Beach.
Apartment sales remains largely unchanged across Abu Dhabi, with the exception of Marina Square (-5 percent), Reef Downtown (-6 percent) and Sun and Sky Towers (-6 percent), all of which faced increased competition from new off-plan developments offered with attractive rates and favourable payment plans.
Only one community, Al Reef, saw a drop in villa sales prices, averaging at 2 percent.
“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,” said Stevens.
Additionally, Q1 saw the launch of a number of new projects such as the Al Fahid Island Master Development by Al Nahda Investment and the Reflection Towers on Reem Island by Aldar, as well as the noteworthy Saadiyat Grove development by Aldar and Emaar.
“While more than 7,300 units are earmarked for handover before the end of 2018, based on previous delivery patterns, a number of these are likely to be delayed, spilling over to 2019,” Stevens said.
With regard to office rates, demand remained lower, resulting in a 2 percent average quarter on quarter drop in rental rates.