2017 to remain tough for Abu Dhabi property market - Asteco
Rental prices for apartments and villas in Abu Dhabi posted declines during the second quarter of this year, an Asteco report has revealed
Rental prices for apartments and villas in Abu Dhabi posted declines during the second quarter of this year, an Asteco report has revealed.
According to the report, overall rental prices for apartments and villas went down by 4% and 1% respectively, compared to the first quarter of this year. Year-on-year figures, meanwhile, show that rental rates have declined by 8% for apartments and 4% for villas.
John Stevens, managing director of Asteco, said: “Approximately 600 apartments were handed over during the second quarter, and more than 2,000 additional units are expected to be delivered over the next six months, placing further pressure on rates.
“2017 will continue to be a challenging year for the Abu Dhabi real estate industry.”
Asteco noted that rates for prime, high-, and low-end properties dropped by 3%, while rates for mid-market properties softened by 5%.
High-end apartments in Central Abu Dhabi, Corniche, and Khalidya/Bateen reportedly posted declines of 4%, 2%, and 2% respectively. Declines in lower end properties in the same locations also declined by 2%.
Asteco’s report also indicates that apartment sales values logged a quarter-on-quarter dip of 4% and YoY dip of 8%.
The company pointed out, however, that sales activity has been registering marginal improvement since the beginning of the year, as developers offered more competitive rates.
Asteco added that demand for off plan developments in locations like Mamshah Al Saadiyat and The Bridges on Reem Island achieved good transactional volumes.
Declines in sales volumes were also reported, except for Marina Square. It is said to have remained flat q-on-q, but declined by 4% on YoY basis. Al Bandar and Al Zeina reported a 6% q-on-q softening, whereas The Gate and Sun & Sky Towers witnessed moderate declines of 2% and 3% respectively during the same period.
Hydra Avenue (City of Lights) and Saadiyat Beach Residences saw sales prices registered a YoY decline of 13% and 11% respectively, with Al Muneera and Reef Downtown both declining by 10%.
Villa rental rates recorded a nominal change between Q1 and Q2 2017, falling just 1% on average and 5% over the year. Drops were more noticeable among the mid-to-low quality products located in Abu Dhabi City and Al Reef, said Asteco.
Saadiyat Island villa rents remained flat in Q2 as did Hydra Village and Mohamed Bin Zayed City. Minimal changes were also witnessed in Al Raha Beach, Nayhan Camp/Muroor, Al Raha Gardens, and Khalifa City, where 1% quarterly declines were recorded.
Sales prices for completed villas decreased by 2% in Q2 2017 and by 4% during the last 12 months.
Stevens said: “Several prime and high-end projects, such as Jawaher Al Saadiyat on Saadiyat Island and Marina Sunset Bay (behind Marina Mall), were launched and recorded good levels of demand due to the overall lack of quality villa developments in Abu Dhabi.
“In addition, new projects on Yas Island and Saadiyat Island continue to achieve strong demand, supported by existing and planned demand drivers such as schools, leisure facilities, and commercial hubs.”
Office rents fell by 2% over the quarter and by 9% compared with Q2 2016. Some units were reported to be discounted up to 15% below the market rate. Demand remains stronger for smaller units, which are reportedly being offered with incentives to retain tenants and negate the lack of new take-up.
Stevens added: “The decline in the office market can be attributed to limited new demand and a dearth of tenants upgrading to larger units or better locations. In an effort to adapt to current market conditions, some landlords are sub-dividing larger office tenancies to meet the demand of those looking for smaller units.”