Chestertons says there is little prospect of improvement in the short to medium term
Abu Dhabi's real estate market softened further in the first three months of 2018, with sales prices and rents for both apartments and villas still in decline throughout the UAE capital, according to Chestertons.
Its residential market overview for Abu Dhabi in Q1 2018 also said there was little prospect of improvement in the short to medium term.
Chestertons said apartment and villa rents fell on average by 3 percent (quarter-on-quarter) while sales prices for apartments and villas dropped by 1 and 2 percent respectively over the same period.
Ivana Gazivoda Vucinic, head of consulting and valuations and advisory operations, Chestertons MENA, said: “Sales prices and rents are expected to face further correction during the rest of this year due to increasing supply encountering weakening demand.
“Overall, the tough macroeconomic conditions and sluggish population growth have both impacted the Abu Dhabi property market over the last few years. However even with rising oil prices, other major economic triggers and increased government spending, might still be required to underpin the recovery of the real estate market in the UAE capital,” added Vucinic.
On average sales prices for apartments decreased 1 percent compared to Q4 2017 with the highest decline was recorded in the Al Reef Community, where prices fell as much as 7 percent.
The only area to witness an increase in apartment sales prices was Saadiyat Island, said Vucinic.
Villa sales prices fell on average by 2 percent but several communities remained resilient recording no change or negligible declines, the report noted.
In the rental market, apartments and villas both witnessed declines of 3 percent on average. For apartments, the highest recorded decline was on Corniche Road, which declined 9 percent across studio, one, two and three-bedroom apartments.
Mohammed bin Zayed City was the only area to show an average increase in price, predominantly attributed to a 10 percent hike in studio rents.
“Studio apartments are expected to become more resilient to negative trends as residents continue to downsize to more affordable accommodation. Therefore, due to smaller units returning greater yields, there could be opportunities for investors going forward. This should be tempered however, by the fact that more choice is available to residents and this will likely be detrimental to apartment prices in secondary areas,” added Vucinic.
The villa rental market witnessed softening across the board, with the Al Ghadeer community the only one showing resilience to the downward trend.