Abu Dhabi real estate sales prices and rental rates continued to fall throughout 2018, albeit at a lesser rate towards the end of the year, according to new research.
Chestertons said that in some locations in the UAE capital pricing levels are starting to become more realistic as a result of the latest declines.
Its report said average apartment sales and villa prices fell by 2 percent in the fourth quarter of 2018 compared to the previous quarter. The year-on-year performance showed that apartment prices declined, overall, by 9 percent and villas by 11 percent.
In the rental market, rates continued to soften as apartments saw a further 4 percent decrease, with a 2 percent drop for villas from the previous quarter. Annually, apartment rental rates declined by 12 percent and 9 percent for villas, it added.
“The rate of adjustment we’re now seeing is slower than previously experienced, which we believe is an indication that prices have reached more realistic levels in several areas of the capital. Prices are expected to continue to soften in 2019 as 11,000 units are estimated to be delivered, ensuring Abu Dhabi remains an even greater buyer-friendly market over the next 12 months,” said Ivana Gazivoda Vucinic, head of consulting, Chestertons MENA.
From an annual perspective, Al Reef (11 percent), Al Reem Island (11 percent) and Al Raha Beach (5 percent) all saw price declines, with only apartments on Saadiyat Island witnessing no change in average sales prices from 2017, the report noted.
In the villa sales market, average it was Al Raha Beach that saw the biggest annual decline, with prices falling by 19 percent.
“With oversupply continuing to hamper sales, we’re seeing developers in the capital, particularly in the off-plan market, offering a range of attractive incentives to investors and end-users in a bid to bolster the market. Service charges being waived, reduced municipality fees and favourable payment plans are all now part of the standard sales package,” added Vucinic.
She said many tenants are continuing the flight to quality trend witnessed in Q3 and taking advantage of the opportunity to upgrade to larger units with better quality amenities in more popular areas
“The recent announcement of Government initiatives to stimulate the economy, as well as the introduction of the new 10-year visa for expats, could see an increase in the investor pool, resulting in an increase in demand in the residential market. However, in the short term we expect sales and rental rates to continue to soften,” said Vucinic.For all the latest business news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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