Abu Dhabi rents likely to continue falling

Properties coming onto market to hit prices

Abu Dhabi Landlords are being forced to introduce special deals and lower rates in order to attract tenants as new projects come on stream in the capital, a report has said.

And the study, by property advisory group Tasweek Estate Marketing and Development, found that the trend is likely to continue as prices in the capital continue to fall.

“These include the waiver of the annual 5 per cent rental i ncrease; acceptance of monthly and quarterly instalments; free unit f inishing and renovation; waiver of electricity and water payments; and one or two months’ grace periods,” the report says.

Tasweek said that Abu Dh a b i e x p e r i e n c e d a steady increase in unit introductions in 2011, which led to significant declines in rental rates especially in areas outside of the city such as Mohammad Bin Zayed City, which offered a bigger supply of new buildings.

As with the other locations in Abu Dhabi, rents on Abu Dhabi Island have been sliding over the past two years, according to the report.

“Because of the dearth of new housing units, many tenants relied heavily on the opening of Al Reem Island and its anticipated market effects. Residential yield averaged 10.5 per cent across all residential categories i n 2011 , with price drops outpacing a rental slide. Commercial yield, on the other hand, averaged 12.5 per cent,” the report said.

It indicated that the phenomenon of rising supply on the island is expected to spill over to the first quarter of 2012 with the introduction of more than 5,000 residential and office units in Al Reem and the com-

These [special deals offered by landlords] include the waiver of the annual 5 per cent rental increase; .... waiver of electricity and water payments.”

Tasweek in new report