Abu Dhabi Market Report Q3 2019 shows sales prices and rental rates for apartments declined by just 1%
Abu Dhabi’s real estate market could be close to bottoming out, according to the latest report from international real estate services firm, Chestertons.
Figures from the ‘Observer: Abu Dhabi Market Report Q3 2019’, show that both sales prices and rental rates for apartments declined by just 1 percent from the previous quarter, while villas remained static.
Nick Witty, managing director, Chestertons MENA, said: “There is no significant new supply expected to be delivered next year which means there could be a better balance between supply and demand. This, and a series of government initiatives including allowing foreign nationals to own freehold properties, will ultimately lead to a more stable market as we move into 2020.”
In the apartment sales market, Saadiyat Island saw no price adjustment in Q3, in stark contrast to the 8 percent decline witnessed in the previous quarter indicating the price point is now in line with market demand for this style of property at AED1,400 per sq ft.
In terms of villa sales, Al Raha Beach Area, Khalifa City and Al Raha Gardens remained at AED1,160 per sq ft, AED872 per sq ft and AED700 per sq ft respectively. Only Al Reef and Al Ghadeer showed modest declines, dropping 1 percent to AED620 per sq ft and 695 per sq ft.
“Overall the capital’s real estate sector is showing signs of positive sentiment with a marked slowdown in sales price reductions. Developers are also recognising the need to be more creative to encourage sales and are now offering flexible payment plans and, in several instances, waiving the registration fee,” said Witty.
“We have also seen developers selling land plots to boost revenues. This type of purchase is expected to prove popular with Emiratis, however, we could also see this pique the interest of other nationalities if positioned correctly,” he added.
Apartment rental rates declined with demand for affordable communities continuing in Q3 as tenants remain price-conscious. A two-bedroom on the Corniche Road is now available for AED115,000 per annum - a 6 percent decrease for this unit size compared to the previous quarter; while in Saadiyat Island, one-bedroom apartments saw an average 10 percent decline Q-on-Q to AED90,000 per annum.
Bucking the rental decline trend, Mohammed bin Zayed City and Al Raha Beach saw a modest increase in rental rates in Q3 of 1 percent. Two and three-bedroom apartments in Al Raha Beach Area increased to AED125,000 and AED169,000 per annum respectively. In Mohammed bin Zayed City, a one-bedroom increased by 5 percent to AED40,000 per annum.
The capital’s villa market witnessed no obvious movement in rates compared to Q2. Al Raha Gardens was the anomaly, as it was the only community to witness a decline, particularly in the four and five-bedroom category where softening of 3 percent and 2 percent was felt respectively, with rates declining to AED160,000 per annum for the four-bedroom unit and AED220,000 for the five bedroom.
“This underscores the demand trend for more affordable rental options as tenants continue to downsize to save costs, particularly in this area,” added Witty.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.