Average Abu Dhabi rents fall 12% in 2012

Average residential rents in Abu Dhabi fell by 12 percent during 2012, according to latest figures compiled by  Asteco Property Management.

The company said it expects to see the gap in rents between new and old property widening during 2013.

In a report, Asteco said it estimated that approximately 15,000 new homes were delivered to the Abu Dhabi market over the course of 2012, with a further 17,000 scheduled for completion this year.

On 2013 sales, Asteco added that the level of transaction activity will be influenced by the outcome of the discussions between the UAE Central Bank and Emirates Bank Association on mortgage caps.

On Wednesday, Emirati banks formally asked the UAE Central Bank to cap mortgages at 75 percent of property value for expats and at 80 percent for UAE nationals.

The Emirati Banks Association also recommended limiting the total loan value to eight years’ salary for UAE nationals and up to seven years’ salary for expats.

Asteco said in some cases, the rental declines seen in the first half of 2012 in Abu Dhabi have been reversed as take up levels increased in the latter half of the year.

Its report said: "In 2013 we expect to see a widening segregation in rental rates between the popular new developments, which, with occupancy levels rising, will be able to sustain rental levels and in some cases achieve growth over the next 12 months, and the older less popular stock, that will continueto see rents come under downward pressure as landlords compete to maintain occupancy."

It added that the performance of the Abu Dhabi's residential leasing market in 2013 will be strongly influenced by a ruling that government employees will be required to reside in Abu Dhabi to qualify for housing allowances.

Asteco also said it estimates that approximately 312,000 sq m of office space entered the market in 2012, with a further 290,000 sq m scheduled for completion in 2013.

"The delivery of superior quality offices combined with attractive lease terms has resulted in growth in transaction activity throughout 2012," the report said.

It added that while take-up has been dominated by the government sector, private sector demand has also increased.

According to Asteco, average Grade A office rents are now AED1,600 per sq m, representing a decline of close to 16 percent over the last 12 months.