Tenants use rent drop to upgrade homes in Abu Dhabi
Apartment rents soften 3% while villas more resilient at an average 2% decline
Abu Dhabi property sales prices and rents are facing continued pressure owing to unfavourable macroeconomic conditions and further supply entering the market, according to real estate services firm Chestertons.
Ongoing redundancies and companies offering lower rental allowances are also hampering rental rates. As such, average rental rates in Q3 2018 were down three per cent for apartments and two per cent for villas quarter on quarter.
"Even the more resilient apartment locations such as Saadiyat were faced with declining rates, admittedly of just one per cent overall, with studios and one-bedroom apartments unchanged from Q3. This has, however, allowed some tenants to take advantage of the downturn by using the opportunity to upgrade to larger units with better-quality specifications, located in more popular areas," said Ivana Gazivoda Vucinic, head of consulting, Chestertons Mena.
The biggest adjustments in the apartment rental market were seen in Al Reem Island and the Al Raha Beach area, both returning four per cent declines Q-on-Q - with studio apartments priced per annum at Dh50,000 and Dh68,000 respectively. However, when compared to Q4 2017, the highest price point in the last year, Al Raha Beach has seen a 30 per cent decrease in rental asking prices for studios.
In Al Ghadeer, Al Khalidiya, Mohammed Bin Zayed City and Corniche Road, apartments fell by three per cent over all, with studios in Corniche Road witnessing the steepest Q-on-Q decline at nine per cent and now available annually for Dh70,000.
Similarly to apartments, villa rentals in Al Reem Island observed the greatest drop at six per cent with a four-bedroom now available for Dh235,000 per year. Locations that remained unchanged in the villa market in Q3 included Al Ghadeer, Khalidiya and Khalifa City, with four-bedrooms in the latter renting for Dh185,000 and Dh170,000 respectively.
"The shift in market dynamics has resulted in several landlords focusing on retaining tenants rather than facing long periods without any rental income, particularly in a market where we're seeing some tenants moving to save a few thousand dirhams a year on their rental budget," added Vucinic.
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