Cluttons says top end of UAE capital's sales market has been relatively positive during Q1
Developers of high-end homes in Abu Dhabi appear to be sensing a bottoming of the market and are pressing ahead with new schemes, according to real estate consultancy Cluttons.
Its Abu Dhabi Property Market Outlook report for Spring 2018 said the first quarter of 2018 recorded a slowing rate of capital value declines across the UAE.
It added that the very top of Abu Dhabi's sales market has been relatively positive, and is showing signs of stabilising.
Faisal Durrani, head of research at Cluttons said: "2018 looks set to be a better year for the UAE economy as a whole, with GDP expected to expand by 2.6 percent, from a seven year low growth rate of 1.7 percent last year.
"This is, in turn, expected to help support more stable rates of job creation and increased government spending as confidence levels improve."
Rents across Abu Dhabi decreased by 2.3 percent during Q1 following the 4.3 percent drop during the final quarter of 2017, Cluttons said. The latest change leaves rents 11.5 percent lower than this time last year.
The falling rents, according to Cluttons, are reflective of the lingering weakness in overall requirement levels. Tenants are wary of the threat of job losses and the rising cost of living, associated with the introduction of VAT and a general upward creep in inflation, which has left many household budgets under tremendous pressure.
Edward Carnegy, head of Cluttons Abu Dhabi, said: "Tenants are negotiating reductions at renewal, while landlords are increasingly receptive to meeting the expectations of tenants by agreeing to close deals below headline asking rates, and they are offering flexible rental payments in multiple cheques to attract tenants as well as other incentives such as zero commission payable and rent free."
According to the report, Abu Dhabi's residential market has the potential to start stabilising by the end of 2018, but until then further softening is expected to persist.