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Abu Dhabi property yields average 5% in Q2 2016

Property investors have witnessed an average gross yield of 5% across the city of Abu Dhabi, according to Chestertons MENA’s Q2 2016 market report

Property investors saw an average gross yield of 5% across the city of Abu Dhabi, topping out at 8.8% in some areas during Q2 2016.
Property investors saw an average gross yield of 5% across the city of Abu Dhabi, topping out at 8.8% in some areas during Q2 2016.

Property investors witnessed an average gross yield of 5% across the city of Abu Dhabi, according to Chestertons MENA’s Q2 2016 market report.

The property agency found that despite relatively flat performance during the first half of 2016, yields within the Abu Dhabi property market have remained attractive.

Property yields in Abu Dhabi topped out at 8.8% during Q2 2016, according to the report.

Commenting on the findings, Declan McNaughton, Chestertons MENA’s UAE managing director, said: “Although the market has flattened further in Q2, and witnessed declines as sales and rental rates dipped further, rental yields are still rewarding investors and, providing that, the capital is still the place to be. Apartments in Al Reef Downtown, Al Ghadeer, and Al Muneera notched yields of 8.8%, 7.7%, and 7.5%, respectively.”

Overall, apartments saw a 2% decrease in rental rates during Q2 2016, compared to an increase in Q1. Average lower-range annual leasing rates for studio and one-bedroom apartments commanded $10,900 (AED40,000) and $14,150 (AED52,000), respectively.

“On average, the residential rental market has dropped by 2%, with the luxury end of the segment bearing downward pressure due to a reduction in spending, compounded by cuts to government spending due to lower oil prices,” McNaughton continued.

“The remainder of the year will see marginal declines. However, solid yields will still prove popular with investors.”

An average two-bedroom apartment in Al Reef Downtown currently rents for $29,400 (AED108,000) annually – a reduction of $545 (AED2,000) compared to Q1 2016. A similar sized property in Al Reem Island, meanwhile, costs $38,100 (AED140,000) per annum.

Al Bandar remains one of the most expensive locations in Abu Dhabi; a two-bedroom apartment costs $52,550 (AED193,000) per year – again, a decrease of $545 (AED2,000) compared to Q1 2015.

Abu Dhabi’s villa rental market witnessed decreases across the board in Q2 2016. Rental rates ranged from $39,500 (AED145,000) and $47,650 (175,000) for four- and five-bedroom villas in the same pricing category.

Average sales prices for apartments and villas in Abu Dhabi also fell during the period.

“We’ve seen a marginal decrease this quarter and, once again, the rate of decline variance among the communities demonstrated mixed sentiments in terms of sales price,” explained McNaughton.

“The addition of new units delivered this past quarter, and a further 3,500 expected by the end of the year, will result in marginal fluctuations during this period of consolidation,” he concluded.

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