Slackening demand has sent residential sale prices tumbling in Abu Dhabi and rents have also declined in most districts, making the UAE’s capital more affordable following prolonged government austerity measures, according to a report.
 
Abu Dhabi is the seat of the federal government and home to the country’s oil industry, which dominates the emirate’s economy, said leading real estate portal Propertyfinder Group in its exclusive 'UAE Real Estate Trends 2017' report.

The sustained slump in crude prices since mid-2014 led to big cuts in oil sector investment and the knock-on effects for the real estate sector show little sign of abating, it added.
 
Sales prices for Abu Dhabi villas fell in six of eight districts in the six months to March 31, according to exclusive data from Propertyfinder Group.
 
Al Raha Gardens dropped 11.8 per cent to Dh843 ($229) per sq ft, while Saadiyat Island remains the most expensive neighbourhood at Dh1,504 per sq ft despite a 5.2 per cent decline. Only Hydra Village, up 0.7 per cent, and Al Salam Street, up 1.6 per cent, bucked the negative trend, said the report.
 
On the villa market, the Emirati portal said the rents followed a similar trajectory, falling in six of seven districts. These ranged from Al Reef’s 10.9 per cent plunge to Al Salam Street’s three per cent decline.

Al Raha Gardens’ rental values rose 1.6 per cent despite the double-digit slump in sales prices. Declines seem uncorrelated to the relative cost, with affordable, mid- and up-scale districts all seeing rents slip.
 
“Rents continue to decline in Abu Dhabi where a reduction in government spending in direct correlation to sluggish oil prices has reduced employment and demand for housing in the capital,” stated the Propertyfinder in its report.
 
For apartments, Saadiyat Islands posted a 6.1 per cent drop in sales prices to Dh1,436 per sq ft, slipping below Al Raha Beach where prices retreated a more modest three per cent to Dh1,479 per sq ft. All districts saw prices fall apart from Al Ghadeer, which rose one per cent, and Yas Island, up (0.6 per cent).
 
“Al Ghadeer sits on the Dubai border and although technically in Abu Dhabi, is closer to Dubai’s commercial and lifestyle centres than to those in Abu Dhabi,” the report added.
 
While apartment buyers seem scarce in Saadiyat, the leisure and tourism destination remains highly sought after by tenants, with rental values increasing 3.9 per cent.

It was the only apartment district to make gains over the period, with one neighbourhood unchanged - Al Raha Beach - and five down. The latter group included some of the capital’s most popular districts such as Al Reef (-8.4 per cent), Al Reem Island (-8.1 per cent) and the Corniche (-5.2 per cent).
 
On the scenario in the residential property sector in the northern emirates of Sharjah, Ajman and Ras Al Khaimah, the Propertyfinder said it has proved more robust.
 
For sales, apartment prices rose 1.2 per cent to Dh537 per sq ft. Villa sales prices dipped 1.3 per cent to Dh563  per sq ft, but are only 18 per cent below Abu Dhabi’s cheapest district, Hydra Village. For rentals, villas rose 4.3 per cent, but apartments slipped 1.7 per cent.

According to the portal, prices have been more stable in the Northern Emirates.

"Always the cost effective option for budget conscious renters and buyers, many of whom commute to and from Dubai each day," said the report.

Prices moved up and down in the very low single digits across the Northern Emirates in both sale and rent over the past 6 months, it added.-TradeArabia News Service