Abu Dhabi rents are set to drop further next year after declining 11 per cent year-on-year in the second quarter, with upscale areas underperforming affordable parts of the emirate, broker CBRE Middle East said on Sunday.
Average rentals for upscale properties dipped 12 per cent, while more affordable units decreased between 6 and 10 per cent, CBRE said.
“Average housing rentals will continue to slide as we move into 2018, although we would expect that both affordable housing options, and good quality community based developments, outperform the wider market average,” said the report.
Employment uncertainty, the rising cost of living and the new supply of property are depressing rents, which have dropped 3 per cent quarter-on-quarter.
“As vacancy rates increase, rental declines are also increasing, driven by the addition of new units in locations such as Reem Island, as well as various stand-alone properties across the capital,” said Mat Green, head of research at CBRE Middle East. “As residents become more prudent in their spending, smaller units in cheaper suburban locations are finding more favour.”
Sales price fell 4 per cent in the second quarter and are set for further declines with the delivery of new units over the next 12 months and as investors wait for prices to soften further.
Meanwhile, the commercial market is suffering from cost cuts at public and private sector companies and an increase in supply.
Prime office rentals in the capital dipped by around 5 per cent to Dh1,750 per square meter in the second quarter compared with Dh1,850 per square meter in a year-earlier period.
Secondary market office rentals plunged 11 per cent in the second quarter to Dh900 per square meter.