Abu Dhabi Residential Rents Dip in Q4 as Sales Stagnate

Abu Dhabi Residential Rents Dip in Q4 as Sales Stagnate

Residential News » Residential Real Estate Edition | By Alma Kadragic | January 12, 2011 1:20 PM ET

(ABU DHABI, UAE) -- Rental levels in Abu Dhabi continued to decline depending on location, quality, and price in Q4 2010, according to a new report published this week by leading UAE property management company Asteco.

With increasing supply, apartment leasing rates steadily declined over the last three months of last year, dropping by an average of 6-7 percent.

According to Elaine Jones, CEO, Asteco Property Management, "Many new opportunities will arise in 2011. Buyers and tenants will have a wide range of choices shortly, as the long-awaited first phases at Reem Island come on to the market, together with new supply at Al Raha Beach. This will undoubtedly add further downward pressure on resale and rental rates throughout the capital moving forward."

Although villa rents declined an average of 5 percent, properties in master-planned communities with good facilities out-performed the market, recording modest increases of 4 percent compared with Q3 2010. This trend continuing from the previous quarter shows that tenants are still prepared to pay more for quality and amenities.

Golf Gardens, situated next to the Abu Dhabi Golf Club on the mainland, is a good example, realising 4 percent growth on top of the 12 percent recorded in Q3, especially for villas with pools. Annual rent for a typical three bedroom house now costs between $68,000 and $73,500.

Sales prices for villas have remained relatively stable over the last quarter with subdued activity. Many owners in Al Raha Gardens and Golf Gardens are reluctant to sell due to attractive rental yields. Prices for a four-bedroom house are between $327,000 and $790,000 and $899,000 to $1.4 million, respectively.

Apartment sales, on the other hand, fell from last quarter to as low as $259 per square foot in Marina Square on Reem Island, highlighting the presence  of distressed sellers with unaffordable final payments. "Many potential buyers realise that nearly 2,300 apartments and 200 villas are scheduled for delivery in the second half of 2011 at Al Muneera and Al Zeina, which will push overall market prices down further," said Jones.

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