Abu Dhabi rent dip to continue
dubai — Property prices and rentals in Abu Dhabi declined further in the second quarter of 2020, and this trend is expected to continue in the secondhalf, say property analysts.
Real estate consultancy Chestertons said apartment and villa prices fell 1.4 per cent and 1.3 per cent, respectively, quarter-on-quarter.
“While we expect Abu Dhabi to see falls in sales prices over the second half of 2020, generous developer incentives, such as extended post-handover payment plans, initial service charge waivers and discounted prices should serve to support transaction volumes,” said Chris Hobden, head of strategic consultancy at Chestertons Mena.
However, he said that further initiatives by both UAE and Abu Dhabi authorities will support an economic recovery over 2021, boding well for the capital’s real estate market in the medium term.
Asteco said apartment and villa sales prices softened by one per cent and two per cent in the second quarter, and nine per cent and six per cent compared with the same period last year. Average declines of 33 per cent and 15 per cent, respectively, have been recorded since the fourth quarter of 2015.
Abu Dhabi and the Central Bank of the UAE announced a number of initiatives, including Dh256 billion stimulus package, waiver of certain fees and reduction in loan-to-value ratios, among others.
“Despite these initiatives and offers, we expect additional sales price reductions and limited demand for the second half of the year and well into 2021,” added Asteco.
Asteco recorded the delivery of around 3,000 apartments and villas over the second quarter of 2020. Another
6,250 residential units are expected for handover by the end of the year, although some projects may incur delays and spill over into 2021.
In the apartment sales market, Chestertons added that Al Ghadeer saw the highest price declines of 2.1 per cent while Al Reef saw the secondhighest fall in average prices of two per cent.
Al Reef saw the highest price declines on an annual basis at 7.8 per cent followed by Al Ghadeer at 6.7 per cent. In contrast, Saadiyat Island was the most robust performing location on an annual basis, with average prices falling by just 2.1 per cent.
Asteco expects an increase in tenants downsizing, together with a rise in repatriation once travel restrictions are relaxed. This has been, and will be, acerbated by uncertainties surrounding post-pandemic economic recovery.
It expects further rental rate contractions for 2020 across all asset classes, along with rising vacancy rates and declining demand, especially for properties struggling to align with the market.
According to Chestertons, average apartment rental rates fell 2.2 per cent and villas by two per cent, a sharper rate of decline than experienced in the first quarter, a result of the economic impact of Covid-19. The highest average rental decrease in the apartment sector was in Al Ghadeer, where average rents decreased by 4.2 per cent from the first quarter of 2020.
“With Abu Dhabi’s economy forecast to rebound next year, we expect to see greater stability across residential prices and rents over 2021,” added Hobden.