Abu Dhabi apartment rents ‘fell by 7% in 2016’
Further drops expected this year, says latest Asteco report
Abu Dhabi apartment rents dropped by 7% and villa prices were down by 5% in 2016, with further drops expected this year, according to a report by Asteco.
Average sale prices for both apartments and villas were down 4% in 2016, the consultancy said in its Abu Dhabi Real Estate Report Q4 2016.
New supply in the market is behind the decline, with about 1,400 residential units handed over during 2016, and around 4,000 units – including 2,700 apartments and 1,360 villas – expected to be handed over this year, Asteco said.
“Although delays cannot be ruled out, this will definitely put pressure on rental rates for existing stock,” said John Stevens, Managing Director, Asteco.
The continued macroeconomic uncertainty will also negatively affect rents as tenants search for more affordable rates.
“Residential units that were previously able to maintain rental levels due to the reluctance of existing tenants to move, are now more likely to be affected as residents in search of the best value-for-money will become more frequent. High profile corporate mergers in the pipeline are expected to lead to increased job uncertainty and could affect employee benefit packages, including housing allowances over the next few years, raising the potential for softening demand and therefore declines in market rates,” added Stevens.
Average apartment rents fell by 7% over 2016, whilst prime and high-end apartments declined by 6% and 9% respectively year-on-year, Asteco said. The average annual rent of a high-end two-bedroom property on Abu Dhabi Island fell 10% to AED141,000 in 2016; and a two-bedroom apartment in Khalidya/Bateen dropping by as much as 13%, on average, to AED146,000. Mid and lower end apartments experienced a 5% drop, primarily during the second half of last year.
