House prices and rents in the UAE are forecast to remain under pressure from new supply coming to market and the impact of distressed assets in the eurozone, a new report has said.
Property advisor Tasweek said apart from some select locations in Dubai, the UAE's real estate sector is likely to see price falls for the remainder of 2012.
Tasweek said Abu Dhabi house prices and rents are forecast to drop by between two and 10 percent.
"The real estate sector [in Abu Dhabi] is expected to continue moving further in favour of tenants and occupiers after the delivery of an additional 2,900 residential units in Q2. Total stocks are currently at around 199,800 units," Tasweek said in the report.
Masood Al Awar, CEO of Tasweek, said that the expected shift in demand to distressed Eurozone countries could further impact the UAE market.
Al Awar said that more real estate investors from the region are eyeing European bargains in light of the continent's economic pressures.
The Tasweek report added that in Dubai, signs had been seen of a price recovery in select prime locations.
However it noted: "Dubai also may feel the same price squeeze as Abu Dhabi in face of the stream of new supply. Non-prime and less popular areas in the emirate have been sustaining between 2-5 percent price drop since the second quarter of this year."
It said Dubai International Financial Centre (DIFC) currently commands the highest average annual rents in the emirate, according to a new report by property advisor Tasweek
It said rents start at AED75,000 for a studio, going up to AED230,000 for three-bedroom units.
The report said Downtown Dubai rental values also performed strongly while bargains can be had at International City, where average annual payments start at AED21,500 for a studio.
Dubai Silicon Oasis also offered some of the cheapest rates of AED24,000 for a studio, the Tasweek report added.
DIFC also led the local market in terms of average commercial rent and buy rates, with commercial space fetching AED 16,799 per sq m on the sales side and AED1,605 per sq m on rental basis, the report said.
The report said: "With the exception of a slight rally observed in some of Dubai's prime locations, real estate recovery is pressurising property prices in general continue to fluctuate in Abu Dhabi and Dubai as more units continue to be added to the existing market inventories."
Tasweek, a provider of real estate development solutions for the UAE and the Middle East, manages properties for over 25,000 customers in the region.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.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.