Abu Dhabi rentals decline first time in two years

25.10.2015
CBRE consultancy recorded third quarter rents quarterly drop in the UAE capital.

Abu Dhabi rental prices reduction in the last three months was quite moderate, just about 1%, but prices in this segment of the housing market went negative for the first time in two years since Q3 of 2013, CBRE latest market research has revealed.

“The market is showing some signs of fragmentation, with older and poorer quality apartments - particularly those in secondary locations - experiencing rental declines and these declines have dragged down the performance of the wider market,” Matt Green, head of research at CBRE Middle East said.

“However, residential villas depict a contrasting trend, recording a small increase of up to 1 percent during Q3 2015. The limited supply, particularly within the main Abu Dhabi Island, reinforced the steady performance of this segment.” Small studios and one-bedroom apartments are now of greatest demand in the UAE capital residential rental market. Such a class property in Abu Dhabi is available for rent at an average of USD 16000-28000 pa for studios and USD 23000-41000 pa for one-bedroom apartments.

Higher income tenants and corporate occupiers in Abu Dhabi prefer well developed residential communities with convenient infrastructure, that’s why such Abu Dhabi locations are more resilient to economic pressure from stagnating oil market. On the other hand, rentals in the less popular residential areas start to fall, maximizing the gap between different market segments, Green said.

As to forecasts for the future housing stock expanding in Abu Dhabi in the next three years, CBRE experts believe the UAE capital will see about 8,500 new units annually, whereas in the past five years, 11,ooo units have been completed annually. This situation will keep high-quality and high-end property prices at the existing level, said the report.

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