Dubai: Anyone looking out for a high-end apartment or villa to rent in Abu Dhabi can get their way, with rates declining by 7- and 10 per cent respective on these property types during 2016. From a landlord’s perspective, the current situation demands they may have to end up making sacrifices on their demands if they need to fill up their properties quickly.
“Redundancies and the shrinkage of the oil and gas sector continue to place pressure on the demand in the market,” said Robin Teh, UAE Country Manager and Director of Valuations and Advisory UAE, Chestertons Mena. “Tenants are seeking lower rental rates as housing allowances have been reduced.”
It is a good thing then Abu Dhabi’s residential stock has not seen a surfeit of handovers in the last years. If that been the case, the pressure on rentals would have been much severe. “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,” said Teh, quoted in the agency’s latest “Abu Dhabi Residential Market Update”.
Apartment rentals in the Al Bandar, Al Zeina and Al Reem Island localities declined by around 8 per cent through the year. Incidentally, Al Reem Island is where a bulk of the handovers are expected to take place this year.
Not that all Abu Dhabi neighbourhoods felt rental declines — Al Ghadeer was the “only area remaining resolute” during the fourth quarter of 2016, while Al Reef Downtown dropped by an average of 3 per cent from the third quarter of 2016. (Apartment rents, on average declined by 1 per cent in the fourth quarter from the previous quarter.) Villa rentals dropped by an average of 2 per cent in the fourth quarter of 2016, but the “overall picture for 2016 was one of significant softening across all areas”, the report adds. “Villas in Al Reef, Al Raha Gardens and Saadiyat Island witnessed average rental decreases of between 10 and 12 per cent.”
Prices
On the sales side of things, average apartment prices were down by 1 per cent in the fourth quarter of 2016 quarter-on-quarter, with the Al Ghadeer and Al Reef Downtown areas recording an above average decline of 2 per cent. Apartments in Al Ghadeer, Al Bandar and Al Muneera witnessed year-on-year average declines of 3 per cent.
Villa sales prices fell 6 per cent last year, with Al Reef Island properties burdened with the steepest dip.
For existing investors, average yields for the fourth quarter of 2016 have remained stable since the second quarter of 2016 at “just above 5 per cent”. 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.”
