Abu Dhabi’s housing market continued to feel the pressures of weakened demand, sluggish economic growth, and cautious investor sentiment, according to the latest report from leading international property company Chestertons Mena.

Sales prices on average decreased by 3 per cent for apartments during the third quarter of the year, as prevailing economic factors prompted residents to move into more affordable areas such as Khalifa City, Mohammed Bin Zayed City, and Muroor, stated the property expert in its Abu Dhabi Residential Market Q3 2017 report.

Ivana Gazivoda Vucinic, the head of advisory and research, Chestertons Mena, said: "In the first half, we saw a number economic factors place downwards pressure on the Abu Dhabi housing market including low oil prices, increased stock in the secondary market, a rising cost-of-living and work redundancies."

"In Q3, these factors continued to steer market performance, while the announcement of new, high-end residential projects, raised caution among investors," stated Vucinic.

"However, an expected revival in oil prices due to global stock depletion and renewed government activity thanks to VAT receipts has cast a slightly more optimistic outlook for the market," she added.  

Saadiyat Island posted the strongest performance as sales prices increased from Dh1,401 per sqft to Dh1,415 per sqft. Al Raha Beach posted the largest decline, at more than 5 per cent quarter-on-quarter, as prices in the area dropped from Dh1,627 per sqft to Dh1,541.

Average villa sales prices fell by 2 per cent in Q3, with Al Ghadeer, falling more than 3 per cent from Dh904 per sqft to Dh875 per sqft; while Al Raha Gardens declined of just over 1 per cent, with prices decreasing from Dh824 per sqft to Dh812 per sqft.

The emirate’s rental market demonstrated similar trends, with an overall decline in rental prices of 2 per cent and 1 per cent for apartments and villas respectively.

The best performing areas were Al Khalidiya, Mohammed Bin Zayed City, Corniche Road and Muroor, due to the prevalence of affordable units with studio apartments ranging from Dh29,000 to Dh55,000 per annum.

Meanwhile, across Al Raha Beach, Al Ghadeer, Al Reef, Reem Island and Saadiyat Island, which all posted negative results, a studio apartment ranged from Dh39,000 to Dh105,000 per annum and three-bedroom apartments ranged from Dh110,000 to Dh196,000 per annum.

In the villa rental market, Al Ghadeer posted the highest decline in average prices, dropping 8 per cent over the quarter, with negative performance also posted in Mohammed Bin Zayed City, Al Reef and Al Raha Gardens, while Al Reem Beach witnessed flat performance, stated Chestertons Mena in its report.

This compares to positive trends recorded in Al Khalidiya, where prices increased by an average of 4 per cent, Al Reem Island and Khalifa City, which both posted a 3 per cent increase in prices, raising the average quarterly results, it added.-TradeArabia News Service