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Abu Dhabi rents marginally down in Q3

ABU DHABI, November 7, 2016

Rental rates for both apartments and villas in Abu Dhabi have been directly impacted by the current macroeconomic challenges, witnessing declines of up to three per cent in Q3, said a report.

Continued cost cutting and downsizing in the oil and government sectors has caused increasing economic uncertainty, job cuts and, in many cases, a drop in employment allowance, forcing residents to seek cheaper and smaller options, according to the latest research report from leading international property agency, Chestertons Mena.

Robin Teh, the UAE country manager/director for valuations and advisory (UAE) at Chestertons Mena, said: "Due to the continuing instability in the job market, demand has weakened in the last few months with major demand arising from the middle and low income groups focusing largely on the affordable housing segments of the emirate."

"Further drops in rents are expected, in line with the trend in neighbouring Dubai," stated Teh.

Al Bandar remains one of the most expensive areas to rent in Abu Dhabi at Dh185,000 ($50,353) for an average two-bedroom apartment, despite a Dh8,000 ($2,177) reduction compared to the second quarter.

While at the opposite end of the scale, similar sized apartments in Al Ghadeer are commanding an average annual rent of Dh72,000 ($19,597), down Dh3,000 ($817) from the previous quarter, said the report by Chestertons.

In terms of the villa market, there was an average drop of three per cent across the villa communites covered in the Chestertons report.

Three-bedroom apartments in Al Reef, Al Raha Gardens and Khalifa City declined by three per cent while similar sized units in Saadiyat Island declined by a marginal one per cent.

Five-bedroom apartments had the highest drops reaching up to five per cent in both Al Reef and Al Raha Gadens. There was a marginal decline of one per cent in the overall residential sales prices, with areas such as Al Ghadeer and Al Reef showing no signs of apartment price depreciation, it said.

The property expert pointed out that average sale price of apartments was Dh1,330 ($362) per sq ft; and Dh1,080 ($294) per sq ft for villas.

Meanwhile, Abu Dhabi still remains an attractive destination for investors, with gross rental yields reaching as high as 8.5 per cent in the apartment sector; and seven per cent for villas.

"The capital’s position as a safe haven for investors has been consistent in recent years, offering returns of 5.5 per cent and above. This has remained true throughout 2016 with overall gross rental yields at a constant level to date within the report coverage areas," remarked Teh.

"Al Ghadeer and Al Reef Downtown remain the most attractive locations for investors with yields between eight and nine per cent. Villas in Al Reef and Al Raha Gardens provide the highest yields between six and seven per cent," he added.

According to Chestertons, approximately 1,000 units were delivered in Abu Dhabi during the third quarter and a further 3,000 units were scheduled to enter the market by the year-end.

Some of the major developments due for completion by 2020 include: The Square – Saadiyat Island, New York University Villas, Mayan Yas Island and The Island Abu Dhabi.

However, Teh cautioned: “There is a slowdown in the completion rate of housing supply compared to 2015 due to the current market conditions forcing developers to delay completion dates.”-TradeArabia News Service




Tags: abu dhabi | Jobs | Oil | rents | Chestertons |

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