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Rents and prices to fall in Abu Dhabi


Abu Dhabi tenants should expect moderate declines in rental and sales rates throughout 2018, says real estate brokerage firm Asteco.

In the fourth quarter of 2017, average apartment and villa rents were down by 10 per cent and 7 per cent in comparison to 2016, whilst apartment and villa sales prices declined 10 per cent and 4 per cent  year-on-year.

“Rental rates and sales prices are expected to follow a similar path to 2017 with further moderate declines for Abu Dhabi due to the continuous delivery of new supply,” Asteco said in a report.

“Limited economic growth continued to translate into job cuts, reduction of staff allowances and limited new employment opportunities.

“This, coupled with the increase in new supply, resulted in a drop in sales prices and rental rates across all asset classes. The decline was most prominent for high and mid-quality properties.”

Whilst rental rates for one bedroom apartments decreased by an average of Dh10,000 per annum, the larger two- and three bedroom units dropped by an average of Dh16,500.

Reductions in villa rental rates and sales prices were less pronounced with quarterly changes varying between 0% and 3 per cent over the course of the year.

“Approximately 9,000 residential units, including 6,200 apartments and 2,800 villas and townhouses are anticipated for completion this year, predominantly within the districts of Reem Island, Al Raha Beach and Yas Island.” said John Stevens, Managing Director, Asteco.

“Based on previous years, the delivery of some of this inventory may be postponed until 2019 such as the delayed office buildings Omega Towers on Reem Island and the ADIB HQ on Airport Road, which were due for delivery in 2017 but are now expected for handover in 2018.” Stevens continued.

Whilst transaction activity for completed properties slowed compared with previous years, newly launched off-plan quality projects with attractive payment plans and discounts will continue to benefit from good levels of demand and ultimately increase investment in the real estate sector for 2018.

In regard to offices, vacancy rates are likely to increase as companies continue to downsize and relocate to smaller units.

Approximately 9,000 residential units, including 6,200 apartments and 2,800 villas and townhouses are anticipated for completion this year, predominantly within the districts of Reem Island, Al Raha Beach and Yas Island. Based on previous years, the delivery of some of this inventory may be delayed until 2019.

Off-plan quality projects offering attractive sales prices and payment plans will continue to benefit from good levels of demand and ultimately increase investment in the real estate sector.

Commercial Property

The overall outlook for the office market is expected to be subdued, with further rental declines projected across all quality grades.

Vacancy rates are likely to increase as companies continue to downsize and relocate to smaller units.

“The recently introduced value-added tax (VAT) of 5 per cent on commercial property is anticipated to adversely affect overall demand and put pressure on rental rates and sales prices in the short- to medium-term,” the report says.

“In the long-term, however, it is believed to improve the financial position of the UAE and provide the necessary funds to further the economy, which would result in business and employment growth..”

The overall outlook for the office market is expected to be subdued, with further rental declines projected across all quality grades. 

PROPERTY FILTER


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