Apartment and villa rental rates recorded decreases of 3% and 2% respectively in the first quarter of 2018 and an annual drop of 11% and 9%, according to Asteco’s Abu Dhabi Q1 Real Estate Report.
Studios to three bedroom apartments reported declines of 1% to 5% over the quarter and 4%-17% over the course of the year, the dip in villa rentals was less pronounced, ranging from 6% to 11%.
John Stevens, Managing Director, Asteco said “As a result of the delivery of new supply during a period of restrained economic growth and subdued market sentiment, we have seen an increase in vacancy rates across all residential unit types.”
Approximately 1,600 residential units were delivered in Q1 2018 with the bulk (more than 75%) located within Investment Zones, including, Yas Island, Al Reem Island and Al Raha Beach.
Apartment sales prices remained broadly unchanged over the quarter in the majority of locations, with the exception of Marina Square (-5%), Reef Downtown (-6%) and Sun & Sky Towers (-6%), which faced increased competition from new off-plan developments offered at attractive rates and favourable payment plans. Al Reef was the only community recording a drop in villa sales prices at an average rate of 2%.
Stevens added; “Although healthy demand for high-quality, off-plan and newly delivered projects continued, lower-end residential units remained under pressure throughout the first quarter of 2018”
Q1 2018 saw the launch of several new projects such as the Al Fahid Island Master Development by Al Nahdha Investment and the Reflection Towers on Reem Island by Aldar.
The most noteworthy announcement was the Saadiyat Grove Development by Aldar and Emaar, which falls within the framework of a strategic alliance between the two companies to develop local and international projects.
Stevens said “While more than 7,300 units are earmarked for handover before the end of 2018, based on previous delivery patterns, a number of these are likely to be delayed, spilling over to 2019.
Over 2,500 units on Al Reem Island, 1,800 on Yas and Saadiyat Islands, including West Yas, Jawaher Al Saadiyat and Maamsha Al Saadiyat, and more than 1,650 units on the Abu Dhabi Mainland are among the key developments. With regard to offices, demand remained low resulting in a 2% average quarter on quarter drop in rental rates. No major office buildings were delivered in Q1, with the anticipated Omega Towers on Al Reem Island and the ADIB HQ on Airport Road due for handover before the end of the year.
