Wednesday, Apr 12, 2017

Abu Dhabi: Abu Dhabi’s property market weakened in the first quarter with rentals and sale prices falling, according to the Abu Dhabi Residential Market first quarter 2017 report from international property agency Chestertons Mena.

Average apartment sale prices in Abu Dhabi fell by 1 per cent in the first quarter of 2017 while villa prices dropped by 9 per cent amid public and private sector downsizing, according to the report.

Al Ghadeer, Al Reef and Khalifa City witnessed the largest percentage drop in villa sales resulting in prices falling to Dh915 per square feet, Dh897 per square feet and Dh747 per square feet respectively.

Al Raha Gardens also witnessed a sales decrease, although less severe, of just under 6 per cent to Dh931 per square foot.

Apartment sales prices, on average, declined by 1 per cent in the first quarter of the year with Al Gadeer witnessing a 3 per cent decrease to Dh1,009 per sqft, while Al Raha Beach fared slightly better with a decline of just under 1 per cent to Dh1,601 per sqft.

Redundancies

Areas bucking the trend included Al Reef Downtown, which saw an increase of 1 per cent to Dh948 per square feet, Al Reem Island remained flat at Dh1,362 per square feet.

“Sales prices are expected to further decline due to redundancies attributed to the shrinkage of the oil and gas sector. We believe the trend of downsizing or moving to more affordable areas will continue until 2018, when an expected increase in government spending could improve market sentiment,” stated Robin Teh, UAE Country Manager and Director Valuations & Advisory UAE, Chestertons Mena.

The report further said that apartment rents declined by an average of 3 per cent in the first quarter of the year compared to the previous quarter with Al Raha Beach witnessing no change, while Al Ghadeer fell on average by 1 per cent. Al Reef Downtown fell by an average of 6 per cent and Al Reem by 4.5 per cent.

Affordable accommodation

Similar to the apartment rental market, Villas also witnessed softening across the board by 3 per cent. Villas in Al Reef, Al Raha Gardens and Khalifa City saw rental decreases of between 1 per cent and 7 per cent.

“Apartment rents have declined across the board as the trend for more affordable accommodation continues. A two-bedroom apartment in Al Raha Beach is now available for Dh155,000 annually; while in Al Reef Downtown and Al Reem Island prices for a two-bedroom start at Dh92,000 and Dh125,000 respectively,” said Ivana Gazivoda Vucinic, Head of Advisory & Research, Chestertons MENA, adding that the new supply will hinder the market further.

“An additional 4,000 apartments and villas by the end of 2017 will add further pressure to the much-maligned rental market in Abu Dhabi.” She also said sales figures, particularly in the villa market, have been sliding gradually since the fourth quarter of 2014 further underscoring the quiet sales market in Abu Dhabi. “Sales prices are likely to continue to ease throughout the remainder of 2017 and into 2018, however we do expect the market to rebound with reinvigorated activity.”

Factbox: Residential market movement in first quarter of 2017

Apartments prices down by 1% and villa prices down by 9%

Apartments rents down by 3% and villas rents by 3%

Staff Report

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