By Karen Leigh
Lower-market properties worst hit, as supply outpaces tenant demand, says report
Apartment and villa rents and sales in Abu Dhabi fell in the fourth quarter of 2010 as fresh supply continues to put downward pressure on rents, real estate consultancy Cluttons said.
“There has been a continuation of downward pressure on rental prices, albeit at a slower rate throughout Q4 2010,’ analysts said in a report.
“In comparison market values have remained relatively constant for most stock, with relatively small falls in the primary areas. Average rental rates have continued to drop for a fourth consecutive quarter as newer stock feeds the market which promises to balance out demand.”
Freehold villa values in new developments such as Al Reef have seen a continuation of falling values of up to twelve percent from the previous quarter, though the private freehold market in upscale areas such as Al Raha Gardens and Golf Gardens have remained relatively robust.
But lower-market properties have suffered, as new supply outpaced tenant demand.
‘Rental rates have seen an average drop of sixteen percent in the lower sector in areas such as Mohammed Bin Zayed City where, thanks to a continuous supply of new stock, one bedroom flats are now available for AED50,000 per annum,” the report said.
Higher-end developments, those towards the northern area of Abu Dhabi Island have seen lesser drops. Average one-bedroom rents are AED110,000, down just eight percent from the third quarter, the report showed.
The most popular developments for sales are Al Raha beach and Marina Square.
Al Bandar – the first segment of the Al Raha project – was at 20 percent occupancy within ten weeks of handover.
But hundreds of owners in the mid-range Marina Square development won’t gain access to their units until at least the second quarter of 2011.