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Tue 12 Jan 2010 10:56 AM

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Abu Dhabi rents predicted to keep falling in Q1

Landmark Advisory says rents of larger homes in UAE capital will especially be hit.

Abu Dhabi rents are likely to keep falling in the first quarter of 2010, due to the downward pressure exerted by more supply and increasingly affordable Dubai rentals, Landmark Advisory said on Tuesday.

Larger units (3-5 bedrooms) will especially be hit by rental decline because smaller units remain in higher demand, its report said.

“There is a high degree of integration between the residential and commercial real estate markets of Abu Dhabi and Dubai,” said Jesse Downs, director of Research & Advisory Services, Landmark Advisory.

“As rents are more attractive in Dubai, some residents of Abu Dhabi find it easy to accept the trade-off of living in Dubai and commute to work in Abu Dhabi. As a result, Abu Dhabi landlords have to compete with Dubai’s better value, and average rent levels will likely keep declining gradually to mitigate this ‘Dubai Effect.’” Findings from October and November 2009 indicated that poor quality apartment units were the worst performing asset.

In December, however, the rent declines also spread to more attractive, better quality apartments, though not to the same extent, the report, in association with LLJ Property, added.

In Q409, rents for lower quality units fell up to 20 percent, whereas higher quality apartments saw rents decline only 10 percent.

Andrea Menown, LLJ Property’s leasing manager, added: "Landlords are growing more flexible in rent negotiations to attract tenants. Previously, rentals were virtually non-negotiable, but today we are in some cases seeing a margin of up to 10 percent, with the greatest margins achievable on high end properties."

Demand for commercial property continued to focus on smaller spaces, echoing the demand pattern observed among residential tenants, the report added.

It said many companies were reluctant to commit to large office spaces, because they expected a combination of more rent competition and better alternatives as more commercial supply becomes available in 2010.

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Fatih Ermihan 10 years ago

Landlords will hear more shocking news in Q1. The reason for that is no salary increment happened in 2009 for everybody. In contrast, salaries decreased and job terminations continued. How can majority of people afford even the aforementioned 10% decreased rental prices? They can not, for sure. Landlords should re-evaluate the rental prices. One example can figure this issue more easily. 2 bedrooms flat should be 110.000AED instead of 160.000AED.

Jill 10 years ago

LLJ is a company that has the most expensive apartments. We rented an apartment in ABu Dhabi through LLJ. Our neighbour did it through Lighthouse and got the apartment at 15% cheaper rent. Guys, please do your home work and speak to multiple agents for the same building, thus you do not land up like us.

Judy 10 years ago

This seems a copy paste job from Asteco report. There is lot of data that is similar between the reports.

kumar 10 years ago

I believe the rents are not high in Abu Dhabi a 2 bed room cost 250,000/-Dhs is reasonable. So plesase help yourself dear Land lords. We will pay what ever to make you and your family happy