Abu Dhabi Downtrend Persists

The survey found no significant evidence to back recent media speculation about a rebound in the cost of housing in Abu Dhabi

By T. Ramavarman And Judy Lam

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Published: Tue 7 Jul 2009, 2:04 AM

Last updated: Thu 2 Apr 2015, 4:42 AM

Rents for apartment in most of Abu Dhabi continued to decline in June with the exception of high-end single-bedroom flats in the central business district, according to a survey by Khaleej Times and property management firm Asteco.

The survey, KT-Asteco Rental Monitor, confirmed an observation made in the May edition that the downtrend in rents would last through the summer.

KT-Asteco survey found no significant evidence to back recent media speculation about a rebound in the cost of housing in Abu Dhabi. On the contrary, the survey found that the rents have eased in several residential areas of Abu Dhabi. More apartments are now becoming available in the central areas of Abu Dhabi as people have moved out to Dubai, out of the country or to suburbs like Al Raha Gardens.

The month of June also witnessed new apartments, on the Defence Road and in the Mussafah area, entering the market, which also contributed to the decline in rents.

However, data based on new high-end stock which came to the market recently showed that rents rose for one-bedroom units in the Corniche locality.

The average annual rents of single-bedroom apartment in the Corniche, Khalidiya, Bateen, Khalifa Street and Salam Street areas went up by two per cent from Dh127,500 in May to Dh130,000 in June. However, the average rents of the two-bedroom apartments in the same localities stood at Dh165,000 and declined by seven per cent — from Dh220,000 to Dh205,000 — in the case of three-bedroom apartments.Interestingly, a lot of tenants have moved from three-bedroom apartments in Abu Dhabi city to villas in the suburban areas such as Al Raha Gardens and Sas Al Nakheel.

Average rents came down, again by seven per cent, even in the case of one-bedroom apartments in areas like Passport Road, Defence Club Area, Tourist Club Area, Airport Road and Hamdan Street from Dh112,500 in May to Dh105,000 in June. However, the average rents of two-bedroom and three-bedroom apartments in these areas were unchanged at Dh132,500 and Dh170,000 respectively.

In areas like ‘Between the Bridges’, Mussaffah, Mohammed Bin Zayed, Khalifa A and Khalifa B, average rent of a one-bedroom apartment remained more or less fixed at Dh87,500. Rents of two-bedroom apartments came down by four per cent in these areas from Dh115,000 to Dh110,000. There was a decline of seven per cent in the average rents of three-bedroom apartments in the same areas from Dh142,500 to Dh132,500.

The study also found that many landlords had unrealistic expectations and were not leasing their vacant inventory. Meanwhile, as many tenants were also prepared to wait for rents to go down. The declining trend is likely to continue until something drastic, such as a large influx of expatriates to work on yet to be announced projects, materialises. On the flip side, tenants might eventually become more discerning and willing to pay a premium for amenities such as gyms and swimming pools.

Judy Lam is the Regional Research Manager at Asteco.


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The average rent for most apartments in Dubai continued to edge lower as more units came to the market amid slackening demand, according to KT-Asteco Rental Monitor.

The average rents for two- and three-bedroom apartments in low- and mid-range areas of International City, Discovery Gardens, Bur Dubai, Discovery Gardens and Jumeirah Lake Towers fell by about five per cent in the May-June period while studios and one-bedroom apartments in the same category and localities saw no month-on-month changes.

The rents in the upscale areas of Dubai have largely stabilised and in some locations such as Palm Jumeirah, the apartment rents have registered an increase due to an addition of a new luxury development that recently hit the market. Even though the cost of housing has somewhat stabalised, the market expects continued weakness.

Leasing agents surveyed expect the rents to soften well into the fourth quarter of the year, as more units become available while demand remains subdued. However, while the downward trend is expected to continue, the pace of fall is expected to be slow down even further.

“It is all about demand and supply,” said Ian Hainey of powerhousedubai.com, a real estate brokerage firm. “More and more buildings are being completed but demand growth is not matching the supply growth. But I do expect the pace of decline in rents to slowdown substantially.”

Demand was relatively strong in locations such as Bur Dubai, Deira, Al Qusais and Discovery Gardens where rents have become more affordable than before. In June, a one-bedroom apartment in Discovery Gardens was leased in the range of Dh48,000 to Dh60,000 per annum, depending on the layout. However, a steady stream of new units in Al Barsha, Tecom and Jumeirah Lake Towers has put downward pressure with people now looking at more options within the same cluster.

Most of the demand was still coming from Dubai residents who were using this opportunity to upgrade or in some cases downgrade. Despite the oversupply in the new Dubai areas, rents have adjusted in an orderly manner because of a steady rise in demand from people moving in from other emirates. It is likely that such a trend would continue to remain strong in the coming months, especially from people shifting from the Capital. Most of the enquiries the leasing agents received were from families looking for a one-bedroom or two-bedroom apartment. “I never knew that so many people were willing to commute to Abu Dhabi every day,” Hainey said.

Moreover, mid-income bachelors or people with non-resident spouses found it easier to rent in mature areas of the city from which they were excluded until very recently. Many residential buildings in the city are no longer restricted to families only. The average rent of a one-bedroom apartment in Bur Dubai was about Dh70,000 a year in June.

Meanwhile, the KT-Asteco Rental Monitor showed a sharp increase of 25 per cent in rentals of two- and three-bedroom apartments in the premium areas of Dubai. This uptick, however, was attributed to the recent handover of Tiara Residence, which was well received in the market. The apartments in Tiara Residences are going at a substantial premium compared to the neighbouring Shoreline Apartments. Three-bedroom units at Tiara were quoted at an average of about Dh230,000 per yearly while the average was below Dh200,000 for Shoreline Apartments.

Office Rents Slide Further

Dubai office rents, one of the highest in the world last year, continued its journey southwards due to new supply and slowdown in domestic business activity. However, office spaces in prime locations such as Dubai International Financial Centre, or DIFC, and Festival City have weathered the storm better than the overall average. The average quoted monthly rent for DIFC office space has been stable at Dh300 per square foot since April. The quoted rents increased by 11 per cent to Dh200 per square foot in Festival City during May-June.

The research also showed a significant inventory buildup in Dubai, especially in Jumeirah Lake Towers and Tecom area. The average quoted rents dropped by 50 per cent in Jumeirah Lake Towers from Dh150 per square foot in May to Dh75 in June. In an attempt to fill space, some of the new building owners in Tecom area have even got exemptions from authorities to lease spaces to businesses that do not hold Tecom trade licences.


With the rents continuing a free-fall, when do you think the market would attain stability? Do you think this could be the right time to invest in property?

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