In the rental market, rates continued to soften as apartments saw a further four per cent decrease, with a two per cent drop for villas from the previous quarter. Annually, apartment rental rates declined by 12 per cent and nine per cent for villas.
“The rate of adjustment we’re now seeing is slower than previously experienced, which we believe is an indication that prices have reached more realistic levels in several areas of the capital. Prices are expected to continue to soften in 2019 as 11,000 units are estimated to be delivered, ensuring Abu Dhabi remains an even greater buyer-friendly market over the next 12 months,” said Ivana Gazivoda Vucinic, head of Consulting, Chestertons Mena.
Apartment sales prices in Al Ghadeer, for the second quarter in a row, witnessed one of the biggest price adjustments, declining 5 per cent Q-o-Q to Dh822 ($224) per sq ft, a 16 per cent decline when compared to 2017. In Al Reef, prices fell by 2 per cent Q-o-Q to Dh880 per sq ft while in Al Raha Beach, apartments remained the most resilient, dropping by just 1 per cent from the previous quarter to Dh1,450 per sq ft.
From an annual perspective, Al Reef (11 per cent), Al Reem Island (11 per cent) and Al Raha Beach (five per cent) all saw price declines, with only apartments on Saadiyat Island witnessing no change in average sales prices from 2017 selling at Dh 1,425 per sq ft in Q4 2018.
In the villa sales market, average Q-o-Q prices fell by two per cent, whereas Y-o-Y the figure was more defined with average prices falling by 11 per cent. It was Al Ghadeer, as with apartments, that witnessed the greatest decline Q-o-Q, falling by seven per cent to Dh 716 per sq ft, denoting a Y-o-Y decrease of 17 per cent. It was only Al Raha Beach that saw a greater annual decline, with prices falling by 19 per cent to Dh 1,035 per sq ft. This figure, however, remained unchanged from the previous quarter indicating prices may have bottomed out in this area.
“With oversupply continuing to hamper sales, we’re seeing developers in the capital, particularly in the off-plan market, offering a range of attractive incentives to investors and end-users in a bid to bolster the market. Service charges being waived, reduced municipality fees and favourable payment plans are all now part of the standard sales package,” added Vucinic.
With both apartment and villa rental rates witnessing a further four per cent and tw per cent decline respectively, Q-o-Q, many tenants are continuing the flight to quality trend witnessed in Q3 and taking advantage of the opportunity to upgrade to larger units with better quality amenities in more popular areas
The highest average declines for apartment rental rates were seen in Mohammed bin Zayed City, Saadiyat Island and Al Ghadeer, falling Q-o-Q by five per cent across the board with a three-bedroom apartment in Mohammed bin Zayed City now available for Dh93,000.
Average rental rates in Al Reem Island dropped by only one per cent from the previous quarter, with three-bedroom apartment rents remaining unchanged from Q3 at Dh140,000. Annually, it was the Corniche that remained most resilient, with apartment rental rates averaging a six per cent decline with a three-bedroom unit available for Dh150,000 per annum as of Q4 2018.
In the villa market, average rental rates in Al Ghadeer, Khalidiya and Khalifa City, remained unchanged from Q3. A four-bedroom unit in Al Khalidiya was available for Dh185,000 and Dh165,000 in Khalifa City as of Q4 2018. Al Reem Island had the biggest villa rental decline, dropping five per cent with a three-bedroom available for Dh200,000.
“The recent announcement of government initiatives to stimulate the economy, as well as the introduction of the new 10-year visa for expats, could see an increase in the investor pool, resulting in an increase in demand in the residential market. However, in the short term we expect sales and rental rates to continue to soften,” said Vucinic.
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