Abu Dhabi rents seen falling further in 2010

CB Richard Ellis report also says rents in Abu Dhabi fall in Q4 but at slower rate.
Abu Dhabi rents seen falling further in 2010
By Andy Sambidge
Tue 02 Feb 2010 11:55 AM

Residential rents in Abu Dhabi declined in the final quarter of 2009 but at a slower rate than at any point during the previous year, CB Richard Ellis said in a new report published on Tuesday.

One-bed apartments showed the strongest performance with just a four percent drop compared to the third quarter with a typical property fetching AED90-130,000 per year.

But many sectors fell as a result of more affordable rental rates in neighouring Dubai, the report said.

It added that further softening of rents were likely in 2010 as more new units enter the market.

CB Richard Ellis predicted that tenants in the UAE capital would see their negotiating power with landlords increasing "at least in the short term".

"More affordable rental rates and better quality alternatives in Dubai were among the key factors influencing weaker residential demand levels in Abu Dhabi," the report added.

The Abu Dhabi Marketview study said that tenants were now becoming "more cautious" with their spending because concerns remained over job cuts.

Landlords and agents were also more open to negotiating rents with tenants, CB Richard Ellis said.

Regarding sales of residential units in Abu Dhabi, the report said the sector had "started to show initial indications of a slight upturn" in Q4.

In the office sector, the impact of the global economic crisis was still in evidence with Q4 leasing and sales transactions remaining subdued.

The report said prime rents continued to slide from Q3 and were now 45 percent lower than 2008 peaks.

While office vacancy rates were just two percent in Q4, CB Richard Ellis said this figure was likely to rise in 2010 due to a combination of new stock and weak demand.

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