Dubai – Masaader News
The Abu Dhabi real estate market softened further in the first three months of 2018, with sales prices and rents for both apartments and villas, still in decline throughout the UAE capital, with little prospect of improvement in the short to medium term.
According to the latest residential market overview for Abu Dhabi in Q1 2018 from leading international property company, Chestertons MENA, apartment and villa rents fell on average by 3% (quarter-on-quarter) while sales prices for apartments and villas dropped by 1 and 2% respectively, over the same period.
Ivana Gazivoda Vucinic, Head of Consulting and Valuations and Advisory Operations, Chestertons MENA, said: “Sales prices and rents are expected to face further correction during the rest of this year due to increasing supply encountering weakening demand.
“Overall, the tough macroeconomic conditions and sluggish population growth have both impacted the Abu Dhabi property market over the last few years. However even with rising oil prices, other major economic triggers and increased government spending, might still be required to underpin the recovery of the real estate market in the UAE capital,” added Vucinic.
On average sales prices for apartments decreased 1% compared to Q4 2017. The highest decline was recorded in the Al Reef Community, where prices fell as much as 7% to AED 923 per sqft, followed by Al Reem Island which fell by 3% to AED 1,152 per sqft.
“The only area to witness an increase in apartment sales prices was Saadiyat Island, which was up 7% to AED 1,497 per sqft, justifying the decision by Al Fahid to launch their latest development, one of the few areas to buck the current downward price trend,” added Vucinic.
Villa sales prices fell on average by 2%, however several communities remained resilient recording no change or negligible declines. Al Raha Beach witnessed the largest decline with a quarter-on-quarter decrease of 10% to AED 1,150. Khalifa City remained stable at AED 895 per sqft as did Al Ghadeer at AED 865 per sqft. Al Raha Gardens experienced a nominal increase in Q1 to AED 802 per sqft.
In the rental market, apartments and villas both witnessed declines of 3% on average. For apartments, the highest recorded decline was on Corniche Road, which declined 9% across studio, one, two and three-bedroom apartments. Mohammed bin Zayed City was the only area to show an average increase in price, predominantly attributed to a 10% hike in studio rents to AED 32,00 per annum.
In comparison a studio apartment in Al Raha Beach is available for AED 82,000 per annum, AED 49,000 in Al Reef, AED 105,000 on Saadiyat Island and AED 50,000 in Khalifa City.
“Studio apartments are expected to become more resilient to negative trends as residents continue to downsize to more affordable accommodation. Therefore, due to smaller units returning greater yields, there could be opportunities for investors going forward. This should be tempered however, by the fact that more choice is available to residents and this will likely be detrimental to apartment prices in secondary areas,” added Vucinic.
The villa rental market witnessed softening across the board, it was only the Al Ghadeer community that showed resilience to the downward trend, where a three-bedroom villa remained at AED 120,000 per annum quarter-on-quarter.
Contrary to apartment rentals, it was Mohammed bin Zayed City that witnessed the largest average decrease across three, four and five-bedroom villas, at 8%. Prices for each unit size vary from AED 122,000 for a three-bedroom, AED 142,000 for a four-bedroom and AED 158,000 for a five-bedroom. All other communities witnessed softening of between 2% and 4%.
In other areas, a three-bedroom Al Reef, Al Raha Gardens, Al Reem Island and Al Raha Beach Area can be rented per annum for AED 123,000, AED 170,000, AED 220,000 and AED 350,000 respectively.