Residential rents and sales prices in Abu Dhabi will undergo further "moderate" declines in 2018, owing to the continuous delivery of new supply, real estate consultancy Asteco said on Wednesday.
“Approximately 9,000 residential units, including 6,200 apartments and 2,800 villas and townhouses are anticipated for completion this year, predominantly within the districts of Reem Island, Al Raha Beach and Yas Island,” said John Stevens, managing director at Asteco.
“Based on previous years, the delivery of some of this inventory may be postponed until 2019, such as the delayed office buildings Omega Towers on Reem Island and the ADIB HQ on Airport Road, which were due for delivery in 2017 but are now expected for handover in 2018.”
Average apartment and villa rents declined by 10 per cent and 7 per cent respectively in 2017 compared with 2016, while apartment and villa sales prices declined 10 per cent and 4 per cent year-on-year, according to the company's fourth quarter 2017 market update.
Abu Dhabi property market slowed in the past two years in line with economic trends, job cuts and reductions in staff housing allowances. This, compounded by an increase in new supply, caused a drop in sales prices and rents across all asset classes, although the decline was most marked for mid-market and luxury properties, the report said.
Rents for one-bedroom apartments decreased by an average of Dh10,000 per annum, the report said, while larger two- and three bedroom units dropped by an average of Dh16,500.
Reductions in villa rental rates and sales prices were less pronounced, with quarterly changes varying between 0 per cent and 3 per cent over the year.
Demand for completed properties slowed compared with previous years, the report added, however, “newly launched quality off-plan projects with attractive payment plans and discounts will continue to benefit from good levels of demand”. This could increase investment in the real estate sector in 2018, it said.
Asteco’s outlook for the Abu Dhabi office sector is also subdued, with further rental declines predicted across all sub-sectors of space. In 2017, reduced business growth and low oil prices resulted in limited demand for office space, causing rents to soften by 5 per cent year-on-year on average compared to 2016.
In several grade A and B offices buildings the decline was more pronounced, Asteco said – up to 10 per cent on some contract renewals.
Around 85,000 square metres of office space was delivered in 2017, mainly within Al Maryah Tower on Maryah Island and the mixed-use Leaf Tower on Reem Island.
Additional office developments anticipated for completion in 2017 were delayed and are likely to be handed over in 2018, the report added.