By Neeraj Gangal
Apartment rents continue to decline with landlords becoming more flexible on price, report says
Villa rents in Abu Dhabi have fallen 8 percent in the first three months of 2011, declining further from the 5 percent decrease of Q4 2010, Asteco said in a report on Sunday.
The falls in rents are especially pronounced within lower quality villas, the UAE property management company said in its Q1 2011 report.
According to Asteco, the high volume of new housing supply already delivered or due to be delivered have resulted in Abu Dhabi’s average leasing rates for Q1 falling 8% across both, apartments and villas.
"On the main island, turnover is slow within the lower quality buildings, where tenants are taking advantage of 'capped' low rental agreements. Among those that have become available, rents have reduced significantly and this is a trend we expect to become more pronounced," Elaine Jones, CEO, Asteco said.
Apartment rents also continue to decline, with landlords becoming more flexible on price, the report said. The declining prices are more evident at the lower quality end of the market, it added.
However, Asteco said that interest in good quality large villas is improving, as tenants, particularly families, are looking to up-size. Rents have stabilised in areas surrounding Etihad Plaza and Golf Gardens.
“On the sales side, prices for villas have remained relatively stable over the last quarter, with many owners remaining naturally reluctant to sell due to market conditions. Prices in Al Reef declined further, 15%, 6% and 8% for three, four and five-bedroom units respectively,” the report stated.
According to Asteco, in apartment sales, the current trend in Q1 2011 is toward “owner-occupiers rather than investors”.
"Overall, investors remain cautious as they await stabilisation of rental prices. For those looking at buying homes, delays in handovers combined with mortgage financing difficulties are also hindering transactional volumes. But we expect the imminent new property deliveries and UAE's improving economic performance will improve the situation," Jones said.
The release of several delayed properties onto the Abu Dhabi residential market during the second quarter is set to “result in a spell of increased rental and sales activity”, real estate agency Cluttons said last week.
Cluttons said that the long-awaited delivery of projects like Sun and Sky Towers, and Marina Square’s RAK Tower – both on Reem Island – would end two years of stalemate in the UAE capital.
It never ceases to amaze me how real estate agents, try to talk up the market outlook, its simple expats are leaving the UAE, there is an over supply in all areas this will be further effected when Saadiyat and Reem Is and many other villa compounds on and off the island come on line. The future for the market it one way, rents are going down, flats and villas will remain empty as agents and landlords hold out for overpriced rent. I am sorry but this is Abu Dhabi, not New York, Sydney or London. Big reality check needed by landlords and greedy agents but either way the market will naturally bring prices down to a fare level. Take the hills compound as an example of silly rent prices, they originally wanted 280 to 350 depending on a pool, now they are asking 350-500. The compound will be 3/4 empty in 12 months.