The current "wait and see" attitude that has been adopted by potential home buyers in Abu Dhabi is a direct result of wider global economic trends, and economic uncertainty caused by the recent US presidential election, according to real estate consultancy Cluttons.
According to findings in the Cluttons Abu Dhabi Property Market Snapshot for Winter 16/17, the Abu Dhabi real estate market has experienced further softening in both the residential and office markets.
Abu Dhabi’s residential market saw a 2.4 percent drop in capital values during Q3 outpacing rental declines which fell by 1 percent in the same period.
On a year to date basis however, rents across the city’s residential investment areas are down by 9.4 percent, while home values have fallen by 5.2 percent, Cluttons added.
Meanwhile, prime and secondary office rents in the city slipped by 5 percent and 8.3 percent respectively during Q3 of 2016 on the back of receding demand.
Cluttons said rates in some of Abu Dhabi’s prime office buildings have also buckled under the market’s weakness, with asking rents declining by up to 20 percent in some Grade A buildings.
Faisal Durrani, head of research for Cluttons said: “We have seen a notable acceleration in the residential market correction as a result of increasing global economic uncertainty and the protracted oil and gas sector's decline, building during Q3 and being further exacerbated as we wait to understand the full impact of Mr Trump's election as President of the United States of America.
“This, combined with continued market softening across residential and office markets has led to nervousness amongst investors, with many reluctant to commit to purchases until they see signs of stabilisation."
Cluttons said it forecasts a 10 percent fall in villa values this year likely to be followed by a decline of around 7 percent in 2017.
It said apartments will likely be less severely impacted with a decrease of 4 percent this year and a further 2-3 percent fall in 2017.
"The villa rental market will continue to bear the brunt of the widespread slowdown in the creation of senior level jobs, with a 20% drop this year likely to be followed by a 7% to 8% drop next year," saud Durrani.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.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.