Sales prices down slightly but rental returns ‘attractive’ – Chestertons
Property prices in Abu Dhabi edged down in a “lacklustre” first quarter, but 6% rental yields still make the market attractive to investors, according to Chestertons.
The real estate agency said villa and apartment sale prices fell by 2% and 1% respectively in the first three months of the year.
But there is a “stable outlook” for investment yields in the UAE capital, with villa rental rates edging up 2% and apartment rents falling marginally by 1%, Chestertons said.
Chestertons is exhibiting at Cityscape Abu Dhabi, which closes today.
“The capital continues to offer attractive yields to investors, with a 6% return in the first quarter. Quality apartments proved to be the preferred choice of investors with Al Reef Downtown and Al Muneera areas securing the highest yields of almost 9% against a softening market,” said Declan McNaughton the UAE Managing Director for Chestertons MENA.
“It’s been an extremely quiet first quarter in terms of major announcements following a swathe of launches in H2 2015, but we are confident that any further launch announcements will be positively absorbed into the market,” added McNaughton.
An average two-bedroom apartment in Al Reef Downtown now rents for AED 110,000 annually, while a similar sized property in Al Reem Island will cost AED 145,000 per annum, Chestertons said. The Al Bandar area remains one of the most expensive locations, with two-bedroom apartments costing around AED 195,000 a year.
To lease a three-bedroom villa in Al Reef would cost an average of AED 153,000 a year, while equivalent properties on Saadiyat Island rent for around AED 340,000.
“With supply failing to match current levels of demand, this has given landlords an opportunity to cautiously raise annual rental rates, although we are seeing a tempered approach where the increases are marginal,” said McNaughton.
“Moving forward, we believe the market will soften further, exacerbated by uncertain economic conditions, and is fast approaching a period of consolidation,” he added.