By Andy Sambidge
Jones Lang Lasalle says declines expected to continue due to prime market oversupply.
Average prime rents of a two-bedroom apartment in Abu Dhabi have fallen by about six percent in the last quarter, Jones Lang Lasalle said in a new report on Wednesday.
Its latest study of the UAE capital's real estate market said average rents for a two-bed in the upper segment of the market stood at AED153,000 in the second quarter of 2010, down AED10,000 on the previous quarter.
Compared to Q2 2009, rental values have declined by about 16 percent, JLL's report said, adding that they have fallen from Q4 2008 peaks of AED231,000.
"Abu Dhabi’s residential rental rates peaked at unrealistically high levels during 2008 due to booming demand, limited supply and the two-tier impact of the rent cap," the report said.
"Forthcoming over–supply in the upper segment of the market is expected to result in a continued decline in average rentals. Lower and mid-market segments will remain expensive relative to affordability due to an overall shortage of supply in these segments," it added.
JLL said there was a total stock of about 179,000 residential units in Abu Dhabi as of Q2 2010. It added that the "Dubai effect" had been a significant factor in rents declining over the past few months, with cheaper accommodation available in the neighbouring emirate.
The report said that with a projected 5.2 percent annual growth in the population of Abu Dhabi, its residential market would continue to be under supplied for a number of years.
The quoted 5.2% population growth is not a projection it is a target and as such is folly. Won't happen and shouldn't be relied upon.
Abu DHabi Real Estate and what they call luxury up market apartments are a joke. There worth is atleast 50-60% less than what is being asked for in terms of sale price and rents. Do not take any aprtment for rent here till it comes 50% down. The only problem is ownership is mostly local and thus exploitation in terms of existing rents.