Apartment rents in Abu Dhabi have fallen by up to 15 percent during the first three months of 2010 and are expected to soften further as more new properties come onto the market, Asteco said on Wednesday.
Affordability has put a ceiling on villa rents, with declines in rents particularly at the upper end of the market, the property services company said in a new report.
It said demand for office space remained subdued with prospective tenants adopting a “wait and see” strategy in expectation of further price reductions, added the Asteco report on the Abu Dhabi property market for Q1.
Apartment rents in Abu Dhabi have fallen on average by between 5-15 percent over the last three months, the report said.
“A trend of falling rents strongly contradicts the pent-up demand and under-supply argument. Asteco estimates that as many as 15,000 apartments will be delivered to the market by the end of 2010, with over 9,000 of these units being built specifically to lease,” the report added.
“In addition, a substantial quantity of the new investment area stock due to complete in the next three to six months on Al Reem Island is likely to become available to lease.”
Of 15,000 apartments being delivered this year in Abu Dhabi, around 4,600 will be completed in the first phases of Al Reem Island (Marina Square and Shams Abu Dhabi) in the next three to six months, with a further 511 units due to complete at Al Bandar, Al Raha Beach within the next three months, Asteco said.
On average, Asteco said sale prices for apartments in Abu Dhabi have shown decreases from AED50 to AED100 per square foot (3-7 percent) over the last three months.
This reflects the increase in the number of listings coming to the market and the fact that some investors with a motivation to sell are more willing to accept lower prices and exit,” the report added.
