Abu Dhabi's affordable areas see influx of tenants
Prime areas such as Saadiyat and Reem Islands see huge rent declines
Tenants in Abu Dhabi are seeing a decrease in rents. The value-conscious ones are making budgetary cuts and moving to more affordable areas. All this comes as a result of weak demand in the capital's housing market owing to sluggish economic growth, says property company Chestertons Mena.
There was an overall decline in rents of two per cent and one per cent for apartments and villas respectively in Abu Dhabi.
The best performing areas were Al Khalidiya, Mohammed Bin Zayed City, Corniche Road and Muroor, due to the prevalence of affordable units with studio apartments ranging from Dh29,000 to Dh55,000 per annum, says Chestertons.
Areas such as Al Raha Beach, Al Ghadeer, Al Reef, Reem Island and Saadiyat Island posted rent drops. Studio rents range from Dh39,000 to Dh105,000 and three-bedroom apartment rents range from Dh110,000 to Dh196,000.
In the villa rental market, Al Ghadeer posted the highest decline, dropping eight per cent. Other communities to feel rental pressure include Mohammed Bin Zayed City, Al Reef and Al Raha Gardens.
"In the first half of 2017, we saw a number economic factors place downwards pressure on the Abu Dhabi housing market, including low oil prices, increased stock in the secondary market, a rising cost of living and work redundancies," says Ivana Gazivoda Vucinic, head of advisory and research, Chestertons Mena.
"In Q3, these factors continued to steer market performance, while the announcement of new, high-end residential projects raised caution among investors. However, an expected revival in oil prices due to global stock depletion and renewed government activity thanks to VAT receipts has cast a slightly more optimistic outlook for the market," she adds.
Sales prices on average decreased by three per cent for apartments during Q3 as residents moved to more affordable areas such as Khalifa City, Mohammed Bin Zayed City and Muroor. Saadiyat Island posted the strongest performance while Al Raha Beach posted the largest decline. Average villa sales prices fell by two per cent in Q3.
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