Abu Dhabi prices slide 47% from 2008

Residential rents in Abu Dhabi have fallen by 10 per cent year-on-year, but average asking prices in the first quarter 2012 have dropped by 47 per cent from the peak in fourth quarter 2008, according to Jones Lang LaSalle (JLL). In the first quarter 2012, rentals declined by seven per cent but the global real estate consultancy predicts lease rates will remain under pressure as more stock is released and tenants get the opportunity to upgrade their housing. In Q1 2012, rents slipped to Dh126,000 for prime two-bed units from Dh140,000 during the same period last year. The softening in rents, David Dudley, Head of Abu Dhabi Office, Jones Lang LaSalle MENA, said in the first quarter Abu Dhabi real estate overview, has affected some districts more than others with Al Raha Beach and Reem Island experiencing the most significant declines due to the locations diverse ownership. “Due to the significant development pipeline, rents will continue to experience downward pressure as the residential sector becomes more competitive, providing tenants with better opportunities to upgrade their housing,” he added. Earlier this month, CB Richard Ellis (CBRE) said rents in the capital had declined by 16-30 per cent in 2011 and the fall was likely to continue going forward with 23,000 new housing units being delivered. In a statement released on Sunday, the consultancy said rental fluctuations are often found to be even more acute for strata developments, with the presence of multiple landlords in the same building creating fierce competition. “Owners are also pushed to lease properties at lower rates in order to prevent the long void periods occurring, subsequently benefitting occupiers across the market,” it added. The rent premium, JLL said, that Abu Dhabi had maintained over Dubai had decreased and will eventually reduce the number of commuters from Dubai. In January, the views expressed by real estate experts were diverse with JLL expecting reduction in the number of people commuting from Dubai to Abu Dhabi, while CBRE contending that new supply in the affordable housing segment will not be enough to entice cost-conscious commuters to the capital. Nonetheless, increasing competition has come as a boon for tenants who are now being offered the option of paying in multiple cheques. JLL says that nearly 2,800 new residential units were delivered in Abu Dhabi during the first quarter.  These units were located in Al Zeina and Al Muneera on Raha Beach, St. Regis Apartments on Saadiyat Island, apartments on Rawdhat and four towers on Marina Square, bringing total residential stock to 196,900 units at the end of Q1 2012. It estimates up to 23,900 units are scheduled for completion this year, but many of these projects are likely to be further delayed. Although a large proportion of the residential pipeline announced prior to 2008 has since been delayed, the aggregate supply could still reach 236,700 units by the end of 2014. In terms of prices, average residential asking prices remained stable in Q1 at Dh10,900 per square metre, but represent a decline of 47 per cent from the peak of Dh21,500 in fourth quarter 2008. Asking prices for apartments are now at Dh11,900 per sqm, whereas average asking prices for villas stand at Dh10,100 per sqm. Despite the introduction of rent-to-own schemes by a number of developers, sales transactions remained limited in the first quarter and were predominantly from Emirati purchasers. Sales transactions for luxury units in prime location picked up, however.