Older properties in secondary locations see bigger rental drops in the third quarter
Abu Dhabi residential rents saw a 1% decline in the third quarter, following modest gains earlier in the year, according to the consultancy CBRE.
The market in the UAE capital is showing signs of fragmentation, with older properties in secondary locations experiencing bigger rental drops during the third quarter, the real estate advisory firm noted.
Average rents for inferior housing units and those in tertiary locations ranged from AED 30,000 ($8,160) to AED 50,000 per annum for studios and one-bedroom units, CBRE said.
In contrast, annual rentals for upper-middle and high-end properties ranged from AED 60,000-105,000 per unit for studios and AED 85,000-150,000 for one-bedroom units. Residential villas showed an increase of 1% in Q3, with the limited supply fuelling the segment’s performance, CBRE said.
The report attributes the differentiation in pricing to a combination of factors such as quality, location, facilities and the proximity to key commercial and social centres.
“The market is showing some signs of fragmentation, with older and poorer quality apartments – particularly those in secondary locations – experiencing rental declines and these declines have dragged down the performance of the wider market,” said Mat Green, Head of Research and Consultancy in the UAE at CBRE Middle East.
“However, residential villas depict a contrasting trend, recording a small increase of <1% during Q3 2015. The limited supply, particularly within the main Abu Dhabi island, reinforced the steady performance of this segment.”
With higher income individuals and corporate occupiers preferring established master-planned communities, prime developments will continue to show resilience, the CBRE report noted. This has been evident in Q3 as rents for new leases remained unchanged despite prevailing market conditions.