Cluttons report also says rental values could slip by a further 7% in 2018
Abu Dhabi's residental rents are expected to end 2017 10-12 percent lower than a year ago, according to a new report.
Cluttons Winter 2017/18 Abu Dhabi Property Market Outlook also said that rents are set to slip by a further 5-7 percent next year unless there is a "notable rebounding in economic growth". report showed higher levels of activity in the rental compared to this time last year.
It said demand in the UAE capital's rental market stems from households relocating to make savings and to take advantage of incentives being offered by landlords. These include the accepting of rental payments through multiple cheques, as well as a growing number of landlords who are willing to pay agency fees, which is often up to 5 percent of the annual agreed rent.
Edward Carnegy, Head of Cluttons Abu Dhabi said: “With household finances under pressure due to a reduction in housing allowances, the removal of various subsidies and the impending introduction of VAT in January 2018, tenants are focused on value for money, as well as quality."
Cluttons said the rate of decline in rents across the city’s residential investment areas slowed to 1.8 percent in Q3, from 3.6 percent in Q2. The annual rate of change has however slipped further to 11.8 percent.
In the sales market, Cluttons’ report indicates that residential capital values across Abu Dhabi’s freehold investment areas declined by 0.4 percent in the three months to the end of September, leaving them just shy of AED1,150 per sq ft, a level not seen since early 2014.
Overall, house prices are now 4.1 percent below where they were at the same time last year.
Carnegy added: “Due to the sustained drop in demand, we have seen developers respond by offering attractive payment plans, as well as bringing residential developments through that are far more affordable than what we have seen previously. Water’s Edge by Aldar, for instance, has been a runaway success, with the Yas Island scheme netting the developer some AED800 million through off plan sales of all units.”
Cluttons previously forecast rents to end 2017 8-10 percent down on 2016 across Abu Dhabi’s freehold residential investment areas.