The combination of increased living costs, cuts in housing allowances and less certainty in the job market have led some residents to downsize to smaller and cheaper units in the second quarter of 2017, according to a new report.
JLL's Abu Dhabi Q2 Real Estate Market Overview said marketplace conditions have led to a decline in occupier demand and residential rents, while residential sale prices have also declined, affected by the continued reduction in transaction volumes and sentiment.
It said vacancy rates will continue to place downward pressure on residential rents.
However, JLL noted that despite reduced demand and more negative sentiment, there remains an opportunity to develop further good quality affordable housing with smaller unit sizes such as The Bridges by Aldar on Reem Island, which was well received.
Its report said average prime rents for 2 bedroom apartments decreased by 3 percent over Q2 to reach approximately AED142,300.
This decline is mainly due to the continued increase in vacancy rates resulting from further job losses. Apartment rents have now declined by around 10 percent over the past 12 months, JLL added.
Average sale prices for prime apartments and villas also declined by 3 percent over Q2 (and by 11 percent year-on-year) to reach approximately AED13,500 per sq m due to the decline in sentiment and reduced transaction volumes.
JLL said approximately 900 units were delivered during Q2, bringing the total residential stock to approximately 250,000 units.
A further 4,000 residential units are currently scheduled to enter the market by the end of 2017, mainly within Reem Island, Saraya and on the Corniche. Previous trends suggest that a significant proportion of this supply will be delayed at the final stages of approval and handover.For all the latest real estate news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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