UAE capital's burgeoning inventory means rental rates will be fixed on a downward trend
Average rental rates in Abu Dhabi fell by 6 percent in 3Q2012 compared to the second quarter, according to CB Richard Ellis’s latest update on the UAE capital’s property market.
The real estate consultancy’s report said that the emirate’s ballooning housing inventory was creating greater affordability for residents but meant that rents were fixed on a downward track, albeit still generally higher than neighbouring Dubai.
The average rental rate for a studio on the main island of Abu Dhabi stood at AED45,000 per unit per annum, compared to AED40,000 per unit per annum in Dubai, the firm’s research found.
Abu Dhabi’s residential market has become characterised by a “highly fragmented landscape” in which some areas and developments are outperforming the market as a whole, said the report, with the largest declines in rents hovering around the 9 percent mark.
The real estate firm’s update said there was no foreseeable end to this trend, as higher quality inventory pressurised prices of ageing and inferior units.
Recently delivered luxury developments in Abu Dhabi such as Etihad Towers, Eastern Mangrove Residences and St Regis Residences were commanding premium rental rates, underpinned by high occupancy and corporate demand.
The delivery of high-end residential projects from World Trade Centre Residences, Nation Towers and Landmark Towers in the near future could pressurise rents at the luxury end of the housing market as competition increases in this space, the report added.
Residential villas have been less impacted by any downturn in rental rates, with quarterly declines generally ranging from 2 percent to 5 percent. Developments in core locations with higher quality facilities and amenities continue to draw the most demand and attract higher rents, the update said.
The CB Richard Ellis update said that a recent directive from the emirate’s government requiring state employees to live locally could raise the requirement for more affordable housing stock, which is currently in limited supply.