Increased market supply and bearish market conditions led rental and sales prices to continue a downward trend in Abu Dhabi, according to a new a Q4 market report from property services company Asteco.
According to Asteco, there were approximately 6,200 residential units delivered in the UAE’s capital in 2018, including 4,500 apartments and 1,700 villas. Approximately half the supply was concentrated on Abu Dhabi’s islands, including Al Reem and Yas Islands.
There were, however, a number of projects that were delayed and that are spilling over into 2019, such as the anticipated Omega Tower on Reem Island.
Regarding rents, he report noted that average annual rents declined 10 and 9 percent, respectively, which Asteco attributes to increased supply and market conditions.
Additionally, demand for office space was generally subdued in 2018 because of limited business and employment growth. As a result, office rental rates for offices fell, on average, 4 percent, although several mid and low-quality commercial buildings recorded increases of 10 percent or more.
The report added that off-plan properties – which were being offered at attractive rates with flexible payment options – continued to generate interest and, in some cases, high demand.
Apartment sales prices, for their part, were found to have decreased 9 percent on average in 2018, with the highest declines recorded in Marina Square and Sun & Sky Towers on Al Reem Island.
In the villa market, sales prices softened 4 percent, with the highest decreases in Al Raha Gardens and Al Reef Villas.
Asteco forecasts that approximately 11,200 residential units will be completed in 2019, including 2,350 on Reem Island, 2,500 at Al Raha Beach, 1,300 on Yas Island and 1,250 on Saadiyat.
This new supply, in turn, is expected to exert further pressure on rental rates.
“Whilst some residents are expected to downsize and seek value-for-money properties, others will take advantage of the increased choice at lower rates to upgrade,” the report added, noting that demand for office space will likely remain “tepid”.
Sales prices are also expected to continue to soften, although Asteco believes that the rate of decline is expected to slow towards the end of 2019.For all the latest real estate 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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