More people are moving from Abu Dhabi Island villas to the mainland in search of cheaper rent as new housing supply hits the market, says the property services firm Asteco.
Prices on Abu Dhabi Island were up to 35 per cent higher than some communities on the mainland, according to a report on Wednesday by Astecoon Abu Dhabi's property market in the third quarter. "With increasingly more supply delivered on the mainland, we are starting to see a population shift from the traditional areas of the Abu Dhabi main island towards the mainland that offers better value for money options, especially in terms of villa developments," said Elaine Jones, the chief executive of Asteco Property Management.
Locations such as Al Reefwere becoming popular thanks to improved road access and affordable prices, Asteco said. As more stock will be released over coming months, prices were expected to fall further.
Four-bedroom villas at Al Reef are on the market for Dh140,000 (US$38,115) a year, according to Asteco's report. Nonetheless, some areas on the mainland are bucking price trends from the past three months, Asteco said.
Rents had increased by up to 12 per cent for villas with pools in Golf Gardens, next to the Abu Dhabi Golf Club, due to a lack of availability and strong demand for good quality villas with facilities. Some villas now have waiting lists. Although some landlords are able to command high rental prices, overall prices have weakened slightly, the report said.
Rents in prime buildings fell by seven per cent with lower-quality buildings dropping by 10 per cent in the third quarter. "This suggests the start of a flight to quality that is widely predicted to continue and accelerate as further new, better-quality supply is delivered to the market over the coming months," the report said.
"But in a falling market negotiating strength is leaning towards tenants [and] it is becoming increasingly important for landlords to recognise this." Persistent delays in the delivery of apartments within the Investment Areas on Reem Island and at Al Raha Beach meant transactional sales activity remained weak over the past three months, with prices coming under pressure as a result, the report said.