House prices and rents in Abu Dhabi are set to maintain a downward trend this year as the fallout from the recent oil price drop continues to affect the market.
According to the property broker Core Savills, prime and mid-prime villa values in Abu Dhabi will fall this year by at least 15 per cent while apartment values will fall by 7 per cent.
In its Abu Dhabi Market Review, Core Savills said that the price falls would be similar to 2016 levels because “similar market conditions persist”.
Core Savills said that housing rents in the capital would also remain under pressure this year as vacancy rates across the city continue to creep upwards as a swath of mergers among Abu Dhabi-based companies including Mubadala and IPIC and NBAD and FGB has led to job cuts.
“These consolidations are starting to reflect in the slowing population growth,” said David Godchaux, its chief executive. “Contractions in housing allowances and disposable incomes coupled with the growing inflation rate have led to a steep downward adjustment on the demand for both residential and commercial real estate.”
Core Savills said that price and rent falls would be particularly marked on Reem Island where another 2,400 homes are expected to come to the market this year as towers including Marina 1&2, Sigma 1&2, Al Shams Tower and M Tower are all due to be delivered this year.
“This glut in supply will be hard to absorb and is expected to cause a sharp drop in both rentals and sales values in Reem Island area,” Mr Godchaux said.
lbarnard@thenational.ae
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