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Tue 27 Mar 2012 12:12 PM

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Abu Dhabi rents fall as new supply hits market

Asteco said rates dropped by 5 percent in Q1 as thousands of units were handed over

Abu Dhabi rents fall as new supply hits market
Apartments and villas in the UAE capital saw rents fall 5 percent (Credit: Bloomberg News).

Rental
rates in Abu Dhabi dropped in the first quarter of 2012 as a wave of new
supply began to hit the market, Asteco said on Monday.

Apartments
and villas in the UAE capital saw rents fall 5 percent during the three-month period as
thousands of new units were handed over, the property broker said.

The average
annual rent for a two bedroom apartment on the corniche ranged between
AED120,000 and AED160,000 in Q1, down 6 percent from the previous quarter.

Rents for
two bedroom apartments on Al Raha Beach saw an even bigger decline, falling
some 14 percent quarter-on-quarter to rates of between AED105,000 (US$33,000) and
AED150,000.

According
to the Asteco report, some 3,000 residential units are now being delivered at Al
Muneera and Al Zeina at Al Raha Beach, while a further 1,455 units are ready for
occupation at Marina Square, Reem Island.

The
remaining 2,030 units at Marina Square are expected to enter the market within
the next six months.

Villas
rates fell 13 percent in MBZ and Mussafah, which the property firm said was due
to large volumes of average-to-low quality stock being handed back to landlords.

Sales
prices for villas in Al Raha Gardens, Golf Gardens and Al Reef Villas remained
relatively unchanged, suggesting good quality villa communities were still in
high demand.

Elaine
Jones, CEO of the firm, said she expected rates for many apartments and villas
to decline further as additional properties were completed.

“The
increase in supply in the higher-end segment of the apartment rental market in
Abu Dhabi is likely to result in further downward pressure on rents,” she said.

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