Monday, Dec 05, 2016

Dubai: Abu Dhabi’s property market continues to be in the grip of a softening sentiment, brought on as much by external factors as internal.

“We have seen a notable acceleration in the residential market correction as a result of increasing global economic uncertainty and the protracted oil and gas sector’s decline, building during Q3 and being further exacerbated as we wait to understand the full impact of Trump’s election as President of the United States of America,” said Faisal Durrani, Head of Research for Cluttons.

Abu Dhabi’s residential market continued to soften during the third quarter; the fall in values (by 2.4 per cent) “outpacing” rental declines (a drop of 1 per cent).

On a year to date basis, rents in the city’s residential investment zones are down 9.4 per cent, while home sales values have fallen by 5.2 per cent.

“Demand has continued to wane over the course of the year, with the primary driver of requirements - the oil and gas sector - still shrinking, and widespread redundancies continuing,” said Edward Carnegy, Head of Cluttons Abu Dhabi. “Undoubtedly this has undermined demand for property, both for purchase and rent. These factors, combined with the wait and see approach of investors, has been most felt by the top end of the villa market.”

As was the case in Dubai, the top end of the villa market faced the brunt, brought on by a “diminishing rate of creation of senior level positions in the capital, while housing allowances also continued to slip across the board,” the report notes.

High-end villas on Saadiyat Island have on average registered a near 25 per cent drop in rental rates between January and September, and early indications from Q4 transactions suggest declines are persisting.

But areas such as Al Reef Downtown, perceived to be more affordable than other areas, posted a 16.1 per cent rise in average rents, and currently at over Dh108,000 and in line with average rents at Hydra Village (Dh105,000). And last year’s stand out performer, Hydra Village rents decreased nearly 11 per cent between January and September.

Staff Report

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