Issues of oversupply and ongoing economic uncertainty continue to put pressure on Abu Dhabi’s residential real estate market, according to Chestertons MENA.Its Abu Dhabi Residential Market Q2 2017 report showed sales prices on average decreased by 3 percent for apartments during the second quarter of the year.Apartments on Al Reem Island witnessed the greatest decline of 7 percent while properties in Al Ghadeer were the only bright spot, rising by 4 percent.Average villa sales prices fell by 4 percent in Q2, with Khalifa City recording the largest drop at 10 percent, the report noted.It added that Al Ghadeer and Al Reef witnessed declines of just 2 percent to be the best performing.Ivana Gazivoda Vucinic, head of Advisory and Research, Chestertons MENA, said: “We are expecting prices to remain under pressure throughout the rest of the year due to the flat economic sentiment and the launch of several new residential projects compounded by a lack of investor-confidence.”The sluggish economic growth of the emirate is expected to have a detrimental impact on government spending which in turn could lead to a drop in property prices because of high vacancy rates caused by job losses.”The report showed that average apartment rents fell by 3 percent, with only Al Raha Beach Area showing a marginal 1 percent increase.Average villa rents also saw a slide of 2 percent, with properties in Al Reef witnessing a drop of 3.5 percent.Vucinic said: “We expect to see residents continuing to downsize their accommodation and moving to more affordable areas as companies cut back on accommodation allowances.”She added: “Sales prices and rents are expected to remain under pressure during 2017 as the market witnesses decreased demand. When government spending begins to increase, we could see a certain element of confidence returning as more public-sector jobs are created, however this is not likely to happen in 2017.”
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