Signs of Abu Dhabi’s real es­tate sec­tor bot­tom­ing out with slow­ing of price

Muscat Daily - - CORPORATE NEWS -

Abu Dhabi’s real es­tate mar­ket is show­ing signs of bot­tom­ing out after a sus­tained pe­riod of fall­ing cap­i­tal val­ues and de­clin­ing rents, ac­cord­ing to Ch­ester­tons lat­est re­search pa­per, the Ob­server: Abu Dhabi Mar­ket Re­port Q4 2019.

A mar­ginal de­cline in sales prices and rental rates dur­ing the fourth quar­ter has re­sulted in re­newed op­ti­mism in the real es­tate mar­ket, with av­er­age villa sales prices de­clin­ing just 1 per cent and apart­ments notch­ing a 2 per cent de­crease. In the rental mar­ket, vil­las wit­nessed mar­ginal fall of 2 per cent and apart­ments de­creased by 1 per cent in Q4.

Chris Hob­den, head of Strate­gic Con­sul­tancy, Ch­ester­tons MENA, said, “More favourable sup­ply and de­mand dy­nam­ics, cou­pled with mar­ket re­forms in­clud­ing new business li­cences, long-term res­i­dency per­mits and al­low­ing for­eign na­tion­als to own free­hold property, are all con­tribut­ing pos­i­tively to Abu Dhabi’s real es­tate sec­tor.

“Go­ing for­ward, we be­lieve it is un­likely there will be the same pro­longed pe­riod of price and rental de­creases as wit­nessed over the past five years.”

In the sales mar­ket, villa prices re­mained re­silient across most com­mu­ni­ties with lit­tle or no price move­ments from Q3 2019, re­sult­ing in an av­er­age 1 per cent de­cline.

Al Reef and Khal­ifa City were sub­ject to mar­ginal de­creases of 1 per cent from the pre­vi­ous quar­ter, with pric­ing now at AED615 per sqft and AED860 per sqft re­spec­tively. Al Raha Beach wit­nessed a more pro­nounced 5 per cent price drop from AED1,160 per sqft in Q3 to AED1,100 per sqft in Q4.

In the apart­ment sales mar­ket in Q4, the cap­i­tal wit­nessed an av­er­age 2 per cent de­crease com­pared to the pre­vi­ous quar­ter. Sim­i­larly, to the villa mar­ket, Al Reem Is­land and Saadiyat Is­land re­mained un­changed at AED965 per sqft and AED1,400 per sqft re­spec­tively.

“At­trac­tive pay­ment plans, such as the Al­dar Prop­er­ties rent-to-own scheme launched in late Novem­ber 2019, are al­low­ing customers to build eq­uity in their homes for a three-year pe­riod. Al­though such schemes are not new to the UAE, we have no­ticed a resur­gence as devel­op­ers ex­plore in­no­va­tive ways to at­tract buy­ers” added Hob­den.

In con­trast to the villa mar­ket, apart­ments in Al Reef wit­nessed a more marked de­crease of 4 per cent, de­clin­ing from AED797 in Q3 to AED765 per sqft in Q4. Al Raha Beach and Al Ghadeer both wit­nessed de­clines of 2 per cent, drop­ping to AED1,250 per sqft and AED725 per sqft, re­spec­tively.

From a rental per­spec­tive, av­er­age apart­ment rates wit­nessed soft­en­ing of 1 per cent in Abu Dhabi, with Al Ghadeer, Al Reem Is­land, Khal­ifa City, Mo­hammed bin Zayed City, and Muroor re­main­ing un­changed with a typ­i­cal two-bed­room apart­ment leas­ing for AED52,000 per an­num, AED90,000 per an­num, AED60,000 per an­num, AED50,000 per an­num and AED65,000 per an­num re­spec­tively.

Saadiyat Is­land apart­ment rental rates fell by 4 per cent, with a typ­i­cal two-bed­room apart­ment rent­ing for AED135,000 per an­num in Q4. In com­par­i­son, mod­est de­creases in rental rates were seen in Al Reef, Al Kha­lidiya and Cor­niche Road drop­ping by 1 per cent.

In the villa rental mar­ket Q4, on av­er­age, de­creased by 2 per cent com­pared to the pre­vi­ous quar­ter. Al Raha Gar­dens had a 6 per cent av­er­age drop, how­ever, it was the larger five-bed­room units that saw the largest de­cline, drop­ping from AED220,000 per an­num in Q3, to AED200,000 per an­num in Q4, de­not­ing a 9 per cent de­crease.

The most re­silient villa lo­ca­tions in Q4 were Al Reef, Khal­ifa City, Al Khalidya and Mo­hammed bin Zayed City, with no rental de­clines.

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