Residential rates continue to drop in Abu Dhabi as renters take advantage of new choices in the market, new data shows.
In neighbourhoods such as Mohammed Bin Zayed City and Khalifa City rents have fallen 10 per cent since the start of the year, after sliding as much as 50 per cent in 2010, according to a report by Cluttons, the property agency.
One bedroom flats in older neighbourhoods that once rented for about Dh120,000 a year can now be found for Dh45,000, said William Dewsnap, Cluttons director of valuations in Abu Dhabi.
Along the Corniche and in other high end areas the decline was closer to 5 per cent in the quarter Cluttons reports.
But even in the top end of the market rental rates should continue to drop as more projects complete in the next few months, Cluttons predicts. More than 3,000 units are close to handover on Al Reem Island, while another 3,000 are in the final stages of construction on Raha Beach.
"It is inevitable that average rental rates will continue to drop as we move into the summer, aided by the new stock coming to the market," Cluttons say in its report.
The new stock coming on line will likely create a period of increased rental activity as people shop for deals, Cluttons predicts. Lower rents in Abu Dhabi will attract many people who are currently living in Dubai and commuting to the work in the capital, Mr Dewsnap said.
"When rents drop we will see people moving down the road" to Abu Dhabi, he said.
The new stock will also prompt increased sales, he believes. Buyers have been reluctant to commit to projects that are under construction, he said.
The competed projects will give buyers confidence and "we will start to see units trade at higher levels than currently," he said.
Values for villas are holding up better than apartments, falling on average only two to five per cent in the quarter, according to Cluttons data.
Beyond the smaller supply of villas, "it is also indicative of the type of people who are coming to Abu Dhabi - more families than individuals or couples," Mr Dewsnap said.
