By Claire Ferris-Lay
Latest report suggests landlords in the UAE capital are now more willing to negotiate on rents.
Apartment rents in Abu Dhabi declined 15 percent in the first half of the year and landlords are becoming more willing to negotiate, according to a report released on Monday.
The UAE’s property market has been hit hard by the financial downturn. An oversupply in Dubai has forced landlords to reduce rates and offer better payment terms. Though prices in the capital have fared better than neighbouring Dubai, an increase in completed projects is likely to push rates down, said a report by the real estate consultancy firm Landmark Advisory and LLJ Property.
“While asking prices for rents are not likely to decrease significantly in the coming months, we expect agreed rents to decline further as more landlords will be increasingly willing to negotiate,” Jesse Downs, director of Research & Advisory Services, Landmark Advisory, said.
Rates for mid to high-end apartments in the capital fell 7 percent during the second quarter. “The mid and high-end segment has seen more competition from new, higher quality supply entering the market in 2010,” said Downs.
Apartment rates in Khalidiyah, City Centre and Al Bateen fell 9-14 percent while average villa rates declined 14 percent in the first half of the year, said the report.
Commercial rates in Abu Dhabi declined 20 percent in the first half of the year with the average office rate now AED 1,700 per sq m. Office rates in City Centre and Tourist Club areas fell 20 percent while those in Khalidiyah and the Corniche declined 10-15 percent.
“Activity slowed down considerably in the commercial market during the last month as companies are now waiting for the handover of higher quality supply at more competitive lease rates. This trend is likely to continue as we enter the summer months which historically experiences low volumes,” said Andrea Menown, leasing manager at LLJ Property.
I thought this market will have to come down some day or the other. The way construction of housing units (mid to higher end) are in progress it will create glut in the market. I am sure still there is a demand for lower to average quality housing for middle class. No new recruitments and more supply of housing units has created the imbalance in the property market. One has to rent/lease it out once it is completed at reasonable, negotiable rates otherwise start loosing. It is the same case across the gulf not only in Abu Dhabi, Dubai is the worst victim. Even Qatar and Bahrain are experiencing the same situation.