New Asteco report also points to reduced housing allowances for decline in rents, sale prices
Abu Dhabi continues to experience negative growth across all property types due to weakness in the job market and reduced housing allowances, according to real estate consultancy Asteco.
Its Q3 Abu Dhabi Real Estate report said that average apartment rental rates dropped by 3 percent over the quarter and by 10 percent over the last 12 months, with the highest declines recorded for mid-end properties and large units within prime and high-end projects.
In the high-end segment, the highest year-on-year declines were recorded at Abu Dhabi Corniche (down 15 percent), while mid-end and low-end areas evidenced the largest declines, including Al Reef Downtown, Khalifa and MBZ City.
The report added that sales prices for apartments declined 3 percent quarter-on-quarter and 10 percent annually. The most significant declines in sales price were recorded in Al Muneera and Reef Downtown, both down 12 percent, with the highest quarterly declines reported in City of Lights, down 8 percent, and Sun & Sky Towers, down 6 percent.
Both Al Bandar and Saadiyat Beach Residence showed resilience, being unchanged for the quarter.
Asteco said about 2,750 apartments have been completed across the emirate since the beginning of 2017, compared with 1,350 for the 2016 calendar year. In addition to the 800 units delivered in Q3, a further 1,500 apartments are due to handover before the end of 2017.
“We are experiencing a weak labour market with reduced employment opportunities and a tightening of housing allowances. This, together with additional supply since 2016 has led to increased vacancy rates which we expect to continue into 2018. Landlords are discounting rents and offering flexible payment terms, (up to 12 cheques) to retain existing tenants and secure new leases,” said John Stevens, managing director, Asteco.
Villa rental rates decreased by 3 percent during Q3 and by 6 percent on an annual basis, the report said.
Only a small number of villas were delivered in 2016, however approximately 550 villas have been completed in 2017 and a further 250 villas are due for delivery before the end of Q4, it added.