ABU DHABI REAL ESTATE MARKET GAP NARROWS IN FIRST HALF OF 2018

Price declines were slower, according to Bayut report, with record traffic in searches for sales and rentals

Residential sales and rental prices fell in most neighbourhoods across Abu Dhabi in the first six months of 2018, albeit at a slower pace than in previous months as market sentiment improves on the back of rising oil prices, according to a new report published today.

Average apartment rental prices were “modest” for the most part, with year-on-year decreases from 3 to 9 per cent during the first half of the year, according to real estate portal Bayut. com’s latest market update.

Apartment sale prices fell 2 to 7 per cent from a year earlier. The drop in villa rental values in the emirate was more pronounced, from 5 to 13 per cent, while villa sales prices slipped 3 to 7 per cent, the report said.

“Overall, there was a downward trend in property prices in Abu Dhabi. However, the drops haven’t been drastic for most of the areas,” Haider Ali Khan, chief executive of Bayut, told The National.

“This could potentially signal a bottoming out. Also, given where the market is positioned right now, these prices should be very attractive to long-term investors.”

UAE property markets have slowed following a three-year oil slump. Rental and sale prices in both Abu Dhabi and Dubai declined steadily, pressured by new supply coming on to the market, muted demand and reductions in housing allowances.

The steepest annual rental market declines in Abu Dhabi during the first half of the year were recorded in five-bedroom villas in Khalifa City B, at 16 per cent, according to Bayut’s report. The steepest apartment rental declies were in Khalidiya, at about 10 per cent.

The largest sales decrease was 10 per cent for studio apartments in Al Reef, while villa sale prices were stabler than other sectors, with the largest declines around 7.3 per cent for five-bedroom properties on Saadiyat Island. Outside Saadiyat – a prime residential area that has experienced sharp price declines since 2014 – the steepest drop was 5 per cent for villas in Hydra Village.

The most popular areas for apartment rentals were Mohammed bin Zayed City, where the price for a one-bedroom apartment was Dh45,000. For sales, it was Al Reem Island, where average studio prices came in at Dh626,000.

For villa sales, Al Reef was the preferred location, with the average price for a four-bedroom villa at Dh2.15 million. For rentals the most popular was Khalifa City A, where the average price for a four-bedroom villa fell by 5.7 per cent to Dh165,000.

Residential sales and rental prices are unlikely to rise in Abu Dhabi in the third quarter, Mr Khan said. But they are expected to begin to stabilise in the latter half of 2018.

“We are seeing record traffic on our site in terms of searches conducted for sales and rentals – a good sign that interest is present, Mr Khan said. “The gap between interest and action is usually a function of how landlords and potential buyers and tenants see the market, and this gap is narrowing.”

Abu Dhabi has experienced growth in tourism, with hotel occupancy rising 4.7 per cent year-on-year to reach 87.9 per cent in April, thanks to an increase in bookings for conferences and exhibitions, according to an EY hotel sector survey.

With other macroeconomic factors improving this year – including recovering global economic growth and oil prices rising to above $80 per barrel last month – the market looks on track for an upturn, Mr Khan said. “However, new inventory needs to be managed to avoid an oversupply situation.”