Abu Dhabi's real estate market further softens
On a year to date basis rents across the city's residential investment areas are down by 9.4 per cent, while home values have fallen by 5.2 per cent.
Abu Dhabi - Rents across the city's residential investment areas are down by 9.4 per cent, while home values have fallen by 5.2 per cent
The Abu Dhabi real estate market has experienced a further softening in both the residential and office markets, causing potential buyers to adopt a 'wait and see' attitude.
"We have seen a notable acceleration in the residential market correction as a result of increasing global economic uncertainty and the protracted oil and gas sector's decline, building during Q3 and being further exacerbated as we wait to understand the full impact of Donalds Trump's election as president of the US," said Faisal Durrani, head of research for Cluttons.
"This, combined with continued market softening across residential and office markets has led to nervousness amongst investors, with many reluctant to commit to purchases until they see signs of stabilisation. As a result, we have left our forecasts unchanged with a 10 per cent fall in villa values this year likely to be followed by a decline of around seven per cent in 2017," he added.
Durrani also said that apartments will likely be less severely impacted with a decrease of four per cent this year and a further two to three per cent fall in 2017. The villa rental market will continue to bear the brunt of the widespread slowdown in the creation of senior level jobs, with a 20 per cent drop this year, likely to be followed by a seven to eight per cent drop next year.
According to findings in the Cluttons Abu Dhabi Property Market Snapshot for Winter 16/17, Abu Dhabi's residential market continued to soften during the third quarter with the fall in capital values (-2.4 per cent) outpacing rental declines (-1.0 per cent). On a year to date basis however, rents across the city's residential investment areas are down by 9.4 per cent, while home values have fallen by 5.2 per cent.
Edward Carnegy, head of Cluttons Abu Dhabi, said: "Demand has continued to wane over the course of the year, with the primary driver of requirements, the oil and gas sector, still shrinking, and widespread redundancies continuing. Undoubtedly this has undermined demand for property, both for purchase and rent. These factors, combined with the 'wait and see' approach of investors, has been most felt by the top end of the villa market."
For Abu Dhabi's rental market, the top end of the villa market has borne the brunt of a diminishing rate of creation of senior level positions in the capital, while housing allowances have also continued to slip across the board. Like the sales market, high end villas on Saadiyat Island have on average registered a near 25 per cent drop in rental rates between January and September, but early indications from the fourth quarter suggest the rental declines are persisting, which will push the rental falls in this affluent submarket lower still.