By Staff writer
Average sales prices and rents drop during third quarter as more than 1,100 new homes enter market
Abu Dhabi's residential market continued to face downward pressure during the third quarter of 2016 as rents and sale prices fell, according to a new report.
JLL's Q3 Abu Dhabi Real Estate Market Overview said that average prime rents for 2-bedroom apartments witnessed a decline of 2 percent compared to the previous quarter while sales prices fell 3 percent.
The demand for residential also declined due to the reducing population with a further wave of job cuts within government, oil and gas, and financial services sectors, the report said.
It added that a total of 1,160 units were delivered during Q3, bringing the total residential stock to approximately 247,300 units. Deliveries included Shams Tower and Najmat C21 Tower on Reem Island, Saraya One on Saraya and two residential buildings within Rawdhat.
Jll said approximately 3,000 units are expected to enter the market by the end of 2016 mainly within Reem Island, Rawdhat and Saraya although some of the developments are likely to experience delays.
David Dudley, international director and head of Abu Dhabi Office at JLL MENA, said: “Ongoing cost cutting and downsizing in the oil and government sectors have continued to reduce demand across all sectors of Abu Dhabi’s real estate market.
“While supply remains under control, increasing vacancy rates are placing downward pressure on residential rents and sales prices. Residents in Abu Dhabi are increasingly looking for cheaper and smaller options owing to further job cuts and reduction in employment allowance and benefits.
"This quarter an additional 1,160 units were delivered in Abu Dhabi. Rents are expected to further decline as supply will continue to increase with another 3,000 units expected by the end of 2016.”
The office market saw no deliveries in Abu Dhabi during Q3, keeping the total office stock stable at approximately 3.5 million sq m of gross leasable area (GLA).
Approximately 50,000 sq m of GLA is expected to enter the market by the end of 2016 with the delivery of ADIB HQ on Airport Road.
Average Grade A and Grade B rents decreased by 2 percent and 5 percent this quarter, the report added.
"The overall vacancy rate has continued to increase marginally over recent months. The decline in demand has generally been mitigated by the lack of new speculative supply and therefore vacancy rates remain slightly lower than a year ago," it noted.