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Abu Dhabi real estate 'faced tough market conditions'

ABU DHABI, July 19, 2017

The real estate market in Abu Dhabi witnessed challenging market conditions during the second quarter mainly due to a drop in demand and increase in supply of housing units in the UAE capital, according to a leading real estate consultancy Asteco.

The Q2 rental price declines for apartments and villas were four per cent and one per cent respectively, stated Asteco in its latest report.

The apartment rentals fell eight per cent year-on-year, while the villas were down five per cent. On the quarter-on-quarter scenario, Asteco said the decline was four and one per cent respectively, it added.

According to the expert, the apartment and villa sales prices registered a decline of eight and four per cent respectively year-on-year, while it fell four and two per cent quarter-on-quarter.

“Approximately 600 apartments were handed over during the second quarter, and more than 2,000 additional units are expected to be delivered over the next six months, placing further pressure on rates. 2017 will continue to be a challenging year for the Abu Dhabi real estate industry,” remarked John Stevens, the managing director, Asteco.

Overall, Asteco research identified a 4 per cent quarterly decline in apartment rental rates in Q2 this year. Prime, high and low-end properties recorded drops of 3 per cent whereas mid-market properties were faced with softening of 5 per cent.

High-end apartments in Central Abu Dhabi, Corniche and Khalidya/Bateen posted declines of 4 per cent, 2 per cent and 2 per cent respectively. Declines in lower end properties in the same locations were also recorded with a relatively subdued 2 per cent decline.

Apartment sales values softened 4 per cent q-on-q and 8 per cent annually. Sales activity has improved marginally since the beginning of the year as developers offered more competitive rates.

Furthermore, demand for off plan developments in popular locations such as Mamshah Al Saadiyat and The Bridges on Reem Island achieved good transactional volumes, said the real estate expert.

Declines in sales volumes were broadly evidenced, with the exception of Marina Square, which remained flat q-on-q although declined 4 per cent on an annual basis.

In other areas, Al Bandar and Al Zeina evidenced a 6 per cent q-on-q softening whereas The Gate and Sun & Sky Towers witnessed moderate declines of 2 per cent and 3 per cent respectively during the same period.

Annually, Hydra Avenue (City of Lights) and Saadiyat Beach Residences saw sales prices decline 13 per cent and 11 per cent respectively, with Al Muneera and Reef Downtown both declining 10 per cent, said Asteco.

Villa rental rates recorded a nominal change between Q1 and Q2 2017, falling just 1 per cent on average and 5 per cent over the year. Drops were more noticeable among the mid-to-low quality products located in Abu Dhabi City and Al Reef.

Saaydiyat Island villa rents remained flat in Q2 as did Hydra Village and Mohamed Bin Zayed City. Other minimal changes were witnessed in Al Raha Beach, Nayhan Camp/Muroor, Al Raha Gardens and Khalifa City where 1 per cent quarterly declines were recorded.

According to Asteco, the sales prices for completed villas decreased by 2 per cent in Q2 and by 4 per cent during the last 12 months.

“Several prime and high-end projects such as Jawaher Al Saadiyat on Saadiyat Island and Marina Sunset Bay (behind Marina Mall), were launched and recorded good levels of demand due to the overall lack of quality villa developments in Abu Dhabi” said Stevens.

“In addition, new projects on Yas Island and Saadiyat Island continue to achieve strong demand, supported by existing and planned demand drivers such as schools, leisure facilities and commercial hubs” he added.

On office rents, the property expert said it fell two per cent over the quarter and nine per cent compared with Q2 2016. Some units were reported to be discounted at up to 15 per cent below the market rate.

Demand remains stronger for smaller units, which are being offering with incentives to retain tenants to negate the lack of new take-up, said Stevens.

"The decline in the office market can be attributed to limited new demand and a dearth of tenants upgrading to larger units or better locations. In an effort to adapt to current market conditions some landlords are sub-dividing larger office tenancies to meet the demand of those looking for smaller units," he added.-TradeArabia News Service




Tags: abu dhabi | real estate | market |

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