Abu Dhabi: Residential rentals continue decline
Apartment rents declined by an average of 1% in Q4 from the previous quarter, Chestertons MENA has reported
Continuing economic uncertainty, job losses, and cost cutting measures are continuing to plague Abu Dhabi’s housing rental sector.
Average apartment rents in Abu Dhabi fell by 7% in 2016 while villa rental rates dropped 10%, according to the Abu Dhabi Residential Market Update Year in Review 2016 report from property agency, Chestertons MENA.
Robin Teh, country manager and director valuations & advisory UAE, Chestertons MENA “Redundancies and the shrinkage of the oil and gas sector continue to place pressure on the demand in the market.
“Tenants are seeking lower rental rates as housing allowances have been reduced.”
Earlier this month, real estate firm, Core Savills noted that prime and mid-prime villa values are anticipated to fall by at least 15% while apartments are anticipated to trail at 7% in 2017.
Apartment rents declined by an average of 1% in Q4 from the previous quarter, with Al Ghadeer the only area remaining resolute, while Al Reef Downtown dropped by an average of 3% from Q3 and 11% year-on-year.
While apartment rentals in Al Bandar, Al Zeina, and Al Reem Island, all fell by around 8%, on average, throughout the year.
Villa rentals dropped by an average of 2% in Q4, but the overall picture for 2016 was one of significant softening across all areas.
Villas in Al Reef, Al Raha Gardens, and Saadiyat Island witnessed average rental decreases of between 10% and 12%.
On the sales front, average apartment prices dropped by 1% in Q4 2016 from the previous quarter, with the Al Ghadeer and Al Reef Downtown areas both displaying an above average decline of 2%.
While apartments in Al Ghadeer, Al Bandar, and Al Muneera all witnessed year-on-year (y-o-y) average declines of 3%.
On average, villa sales prices fell by 2% from Q3 to Q4 and 6% overall. Al Reef Island saw the greatest y-o-y drop at 6%.
Al Raha Gardens, Saadiyat Island, and Khalifa City all fell 4% from 2015 prices due to a quiet sales market, the report said.
Meanwhile, average yields for Q4 2016 remained stable since Q2 2016 and stayed flat at just above 5%.
Teh said: “There is a similar situation in Dubai, with residential sales and rental prices falling and yet yields remaining fairly consistent throughout the course of 2016.
“We expect the pressure on rents to remain throughout the first quarter of 2017 with the continuous cost cutting measures and job instability in the current market.”
In Dubai, around 20,000 new homes are expected to be delivered this year as increased supply in the property market may push down prices in key areas, experts have pointed out.