CBRE report says residential market continues to see declines driven by weak demand fundamentals
Average residential sale prices in Abu Dhabi declined by around 1 percent in the first quarter of 2018 and by 5 percent annually, according to consultants CBRE.
Its Abu Dhabi Market Overview report said secondary market transactions in particular suffered from supressed investor sentiment.
The report noted that Abu Dhabi’s residential market continues to experience deflationary pressures driven by weak demand fundamentals and the cautionary approach of many occupiers, due to the uncertain employment environment.
In the leasing market, average residential rentals have also continued to fall. However, the rate of decline is now lower than has been evident for much of the last three years, CBRE said, adding that rents in the capital have dropped by around 10 annually, but the quarterly change was around 1.6 percent.
Despite the general downward trend in average rental rates, the emirate’s housing performance has remained somewhat mixed, depicted by a range of declines between 1-5 percent during the year period, said CBRE.
It added that residential leasing markets are expected to follow similar downward trajectories as the previous year, as new supply places further pressures on rentals and occupancy rates.
Despite the more challenging economic environment, Abu Dhabi’s residential sector continued to witness an active off-plan sales market, led by a series of launches from the local developer Aldar. In 2017, Aldar is estimated to have launched close to 1,900 homes, of which 83 percent of the units were sold by the end of the year.
By end 2020, the level of new supply in Abu Dhabi looks to be consistent, averaging just over 8,250 units per annum, and totaling roughly 25,000 units, CBRE's report added.