Rents continue to fall in Abu Dhabi

Apartment rents and sale prices in Abu Dhabi continued to decline in the second quarter of this year as new stock entered the market, outpacing demand, property consultancy firm Asteco said on Tuesday. While rents for quality villas, which are still in short supply remained relatively stable, additional supply will put some downward pressure on prices as the year progresses, Asteco said in its second quarter 2011 report. It said apartment rents fell by an overall average of nine per cent during the quarter. "Two-bedroom apartments in quality developments on the Abu Dhabi Corniche are now leasing for between Dh140,000 and Dh170,000, while apartments in central Abu Dhabi ranged from Dh120,000 to Dh140,000," said the report. "The downward trend is unlikely to change in the short term due to further prime stock entering the market across a number of key landmark developments in the second half of the year," said Elaine Jones, chief executive officer of Asteco Value for money "This will encourage existing tenants to look for greater value for money in the capital, applying yet more downward pressures on rental prices," she added. David Dudley, regional director for Jones Lang LaSalle (Middle East and North Africa), a global property advisory firm, told Gulf News that though he agreed with Asteco that rents in Abu Dhabi were falling, they weren't falling quite as much as was being projected. The Asteco report also pointed to some areas that are beginning to buck market trends, such as the Al Bandar development at Raha Beach. The few units that have been handed over have managed to secure moderately higher rents than were achieved in the previous quarter. "Two-bedroom apartments are now leasing for between Dh140,000 and Dh180,000. This increase is likely to be short-lived however, given the imminent handover of Al Zeina," said Asteco. It said the handover of apartments in Sun and Sky Towers is anticipated to bring renewed confidence to the freehold market, while Sorouh's launch of the popular rent-to-own scheme is also hailed as a welcome innovation, with Aldar planning a similar scheme on certain properties at Al Raha Beach. Small gain in villas The report found that villa sales prices in Al Raha Gardens, Al Reef and Golf Gardens witnessed modest gains of about three per cent overall, but sales prices for three-bedroom properties continued to decline, with falls of up to five per cent. At Saadiyat Island, the Saadiyat Beach Villas, which comprise a high-end luxury development, are selling from Dh6.5 million for a three-bedroom villa to over Dh30 million for a six-bedroom property with views over the Gary Player golf course, it added. "The UAE federal government has announced the decision to extend the property visa period from six months to three years. This can only be a positive move and is expected to improve demand among foreign investors in the emirate," said Jones. Meanwhile the office rental rates in Abu Dhabi recorded a decline of seven per cent in the second quarter with landlords prepared to negotiate to secure tenants.