Chestertons report says residential market in UAE capital set to remain under pressure as 6,000 new units are set to be added
The current decline in sales prices and rental rates in Abu Dhabi’s residential market is predicted to continue with the addition of about 6,000 units during the remainder of 2018.
That's the view of international property company Chestertons which said in its Observer: Abu Dhabi Q2 2018 report that about 1,600 units were delivered to the market in the first quarter of the year, predominantly on Yas Island, Al Raha Beach and Reem Island.
It said a further 6,000 units expected to be delivered over the rest of the year will negatively impact sales prices as investors wait for the best possible deal and tenants negotiate new contracts as landlords attempt to keep properties occupied.
Chestertons said, overall, sales prices of apartments and villas softened in Q2 by 3 percent and 4 percent respectively quarter-on-quarter, while apartment and villa rents continued to fall, 3 percent and 1 percent respectively.
“The Abu Dhabi residential market is continuing to face tough market conditions due to increased supply. The sales market is faltering as potential investors wait it out for the right property, at the right price. We’re seeing an increased trend of investors being more cautious and waiting for stability to return to the market,” said Ivana Gazivoda Vucinic, head of consulting and valuations and advisory operations, Chestertons MENA.
The apartment sales market softened across the board with Saadiyat Island witnessing the steepest decline with a 6 percent drop.
The villa sales market witnessed a more marked decrease, the report noted.
It added that landlords looking for some respite will be disappointed, with all areas returning another quarter of decreasing rates across apartments and villas.
“Landlords are having to pull out all the stops to ensure continued occupancy of their properties. Incentives include reduced prices, multiple cheques and even waving agency fees. Adding to the pressure on landlords has undoubtedly been the recently implemented ‘Property Tax’ by Abu Dhabi Municipality, with rates for apartments now at 5% percent, while villas are subject to 7.5 percent tax,” added Vucinic.