Rents of apartments, villas and offices in Abu Dhabi fell during the second quarter of 2017 and could see further drop, says a new report, reaffirming earlier studies of rents remaining under stress for the remainder of the year due to the increase in new supply.
In Q2, apartment rents in the UAE capital on average dropped four percent while those of prime, high and low-end properties saw a three percent drop, whereas mid-market properties were faced with a softening of five percent, says real estate consultancy Asteco.
"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," said John Stevens, managing director, Asteco.
Real estate consultancy JLL reported earlier this month rents declined in the second quarter and the trend is likely to persist for the remainder of the year.
Jalal Mamdouh, leasing coordinator at Prime Capital, told Khaleej Times recently that rents in Abu Dhabi are expected to decrease throughout 2017 due to companies cutting costs. "Many expats have left, which means the rental prices also decline."
According to Asteco, high-end apartments in Central Abu Dhabi, Corniche and Khalidya/Bateen posted declines of four per cent, two per cent and two per cent respectively. Rent declines for lower-end properties in the same locations were relatively subdued at two per cent.
Though sales of apartments softened four per cent quarter on quarter and eight per cent year on year, sales activity improved marginally after developers offered more competitive rates to customers.
Office rents fell nine per cent in Q2 2017 as compared with Q2 2016 with some units reportedly discounted up to 15 per cent below the market rate. However, demand remains stronger for smaller units, which are being offering with incentives to retain tenants to negate the lack of new take-up, Asteco added.
By Waheed Abbas