Abu Dhabis rental market witnesses downward correction: Chestertons

UAE – Mubasher: The real estate market within the emirate of Abu Dhabi is likely to grow in the medium- to long-term, backed by the freehold law along with the introduction of a 10-year residency visa, according to Chestertons’ recent Abu Dhabi Market Report for the second quarter of 2019.

Price and rental costs in Abu Dhabi have witnessed downward corrections in Q2-19, with sale prices for apartments and villas falling 5% and 3%, respectively, the UK-based real estate agent said.

Meanwhile, average rental rates of apartments and villas contracted to 6% and 3%, respectively, the report added.

Al Muroor has seen the biggest rental decline of 16% to AED 65,000 per annum for a typical two-bedroom apartment, while Mohammed Bin Zayed City rates dropped 10% quarter-on-quarter to AED 50,000 for the same size accommodation.

Moreover, average apartment rates in Al Reef decreased by 2% in Q2-19 with a typical two-bedroom apartment available for AED7 1,000, the report showed.

Nick Witty, managing director of Chestertons MENA, said: “Downward price corrections in this quarter are expected to continue throughout the rest of this year as over 11,000 units are scheduled to be delivered, which is creating a highly competitive market in favour of both tenants and home-buyers, to the detriment of property prices and rents.

“The recently announced freehold law is expected to generate a marked improvement in the capital’s real estate sector, the UAE ministry has also recently cut work permit fees by between 50% and 94%, while the 10-year residency visa should enable people to put down roots in the country and encourage them to invest in property for the long term,” Witty highlighted.

In the first half of 2019, the UAE’s capital sales market has experienced a shift towards affordability and competitive pricing with apartment prices falling by 8% quarter-on-quarter in Saadiyat Island at AED1,400 per square feet, the largest decrease in all communities.

This came after prices dropped by 6% quarter-on-quarter to AED 1.300 and AED 750 per square feet in Al Raha Beach and Al Ghadeer, respectively.

Al Reef was the most resilient, with apartment prices easing by 1% to AED 814 per square feet in Q2-19, the report indicated.

As for the villa sales market in the emirate, it maintained declining in Q2-19 with Al Raha Beach and Al Ghadeer seeing price corrections of 5% to AED 1,160 per square feet and AED 700 per square feet, respectively.

Average villa sale prices at Al Reef witnessed decreased by 3% in Q2-19 with at AED 628 per square feet, however, villa prices at Khalifa City remained the same as in Q1-19 at AED 872 per square feet, the report said.