By Andy Sambidge
Rents in UAE capital fall slightly in Q4 2009 but still more expensive than city neighbour.
Apartment rents in Abu Dhabi saw marginal falls in the last three months of 2009, as increased residential supply came on line, according to a new report published on Monday.
Property services company Asteco said that although rents in Dubai have on average remained stable over the last quarter, apartments were still on average in the region of 20 percent cheaper than in Abu Dhabi.
“Thus the number of people working in Abu Dhabi but continuing to live or moving out to Dubai is remains noteworthy,” said Elaine Jones, CEO of Asteco.
“This trend is not expected to change in the short term without the perceived value for money versus location issue being addressed.”
She added: “Given the slight increase in vacancy levels and the additional supply of residential property in Abu Dhabi, the rental market has shown signs of softening, striking more of a balance between the negotiating power of tenants and landlords.
“The growing availability of units and a revival in market activity after a traditionally slow summer period have resulted in a minor downward fluctuation in the cost of renting in Abu Dhabi,” she added.
In terms of new quality supply in Abu Dhabi, there are around 2,000 new apartments due to be ready for lease on the main Abu Dhabi Island during the first half of 2010, with a similar number during the second half, the report said.
In addition, Marina Square, Sun & Sky Towers and Al Bandar will provide around 6,500 apartments by the end of the second quarter 2010 with a further 1,286 units due to come online at Al Muneera by the end of 2010.
On villa rents, Asteco reported a mixed picture with villa rents on the main Abu Dhabi Island declining between 10 to 20 percent in the last quarter. The largest falls were seen among the larger five-plus bedroom villas at the luxury end of the market.
However, the off-island villa developments of Al Raha Gardens and Sas Al Nakhl witnessed continued healthy demand following sharp reductions in rents earlier in the year with rents largely stable over the last three months.
Retail rents for ground floor shop units and showrooms in Abu Dhabi have fallen by between 5-10 percent over the last three months, continuing the downward trend from earlier in the year, Asteco reported.
“Despite the drop, there is, in many cases, still a mismatch between landlords’ rental expectations and those of prospective tenants, and thus an increase in available vacant space is evident, providing retailers with options and thus negotiating power.”
The report also showed that Al Ain’s residential market continued to see slight decreases in rental rates in the fourth quarter last year, predominately for new villa buildings.
I live in Abu Dhabi and currently looking to move from a 1 to a 2 bedroom apartment. The prices are easily double that of Dubai with far worse conditions. I'm sure prices will significantly fall down soon as no person in his right mind would pay at least 150K with the quality standards of Abu Dhabi apartments. People will still commute from Dubai, at least for a while.
I live in Abu Dhabi in a sharing accommodation. My house owner told us that from the month of feb onwards I must pay AED 4000.00 per month (for 01 room in a sharing apartment). I was paying AED 3000.00 till this month. All of my friends / relatives who rented out an apartment has told me that their rents have been increased atleast by 5%. Also, the rents in Abu Dhabi are atlest on an avarage 50% higher than that is in Dubai. Please open your eyes widely and try to see & understand the real situation.
I wonder how they come to that conclusion . Dubai rents are simply half of Abu Dhabi rent may it be studio, 1 bed or 2 bedroom flat. Although difference is slightly less for 3 bedroom or 4 bedroom flat .
Agreed with Joe. No doubt that availability is increasing in Abu Dhabi, however due to the holding power of owners, banks and property dealers fall is very slow and not noteable.
According to new law if 1 bedroom in Dubai = 40,000 1 bedroom in Abu Dhabi = 120,000 Then the difference is 20%
I presume the problem is lot more complex. The Abu Dhabi rents have been coming down from the peak in 2008, but if somebody rented the apartment before that, then yes rents are going up. But, people if you vacate your apartment, the rent will be 3 times higher as the current market rents are high. You are all being saved by high market rents. I was paying AED140,000 for my 1 bed and now I am paying AED120,000. Thus the rents are down. On the other hand my next door neighbour is paying AED45,000 and from him the rents are going up by 5%. But, are they really going up. Nope. He should be paying today's market rent or stay in Mussafah. As for Asteco showing only 20% difference, they have got that massively wrong between Dubai and Abu Dhabi.
I am happy to see the rents are coming down. I rented a 2 bed for AED180,000 and can now get a 2 bedroom for AED140,000. I feel really bad that I have to pay such high rents and rest of the people protected by rent cap are crying over 5% increase over highly subsidized rents. The rents should not be so low on main Abu Dhabi city. If people want cheap apartments they should go to Mussafah. As for Asteco, they surprisingly got it wrong this quarter after hitting the bulls eye for last 4-5 reports. Guess the vacation took its toll on the researcher.
Asteco seems to get their maths right. Unless they are comparing the whole od Dubai to Tiara ... what duh's This is common sense and they should have just asked any educated UAE expat and they have told them that 20% is wrong. Dubai Marina is 80,000. Also why are the people of Abu Dhabi so disconnected with reality. Two bedroom hit AED250,000 for a year and its come down to AED130,000 (go to LLJ it will shoot to 150,000, maybe even 180,000) Lot of people who are crying about paying 5% increase on your low rents, please try and get another apartment or same apartment under new contract. You will face the reality. If you want cheap apartments go to Mussafah. Abu Dhabi city should set a rent cap at minimum 1 bedroom - AED80,000 2 bedroom - AED120,000 3 bedroom - 160,000 They should go away from controlling the rents otherwise people will never understand that rents are going up or down as they have been protected by the 5% rent cap.
Many people here are suggesting to move to Mussafah for lower rents. Well, the rents in Mussafah is not low either. On top of that, for those who are working in the city, commuting is a problem since there is no good public transport. If you take your own car, do I have to go into the detail of parking issues ? And, may people are on split shifts ... for them commuting from Mussafah is a nightmare !
i've just spoken to Asteco and they told me that the report shows a 20 to 40% difference and not a flat 20%, which is probably more in line to what i've seen in Abu dhabi.