Abu Dhabi: Rentals in Abu Dhabi continue to be on the slide as more stock is delivered in the prime residential areas. But the decline will eventually work in the emirate's favour, according to market analysts.
"Going forward, lease rates will need to compete with Dubai, as there is currently oversupply in that market, causing steep price declines, coupled with better quality than is available in the capital," said Jesse Downs, director of research and advisory at Landmark Advisory.
Blair Hagkull, chairman of Jones Lang LaSalle - Middle East and North Africa, agreed that Abu Dhabi rents are on the decline. "With greater supply and competition, Abu Dhabi is ultimately becoming more competitive for residential and office users alike," he added.
"With new supply comes opportunities to upgrade residential homes and to have greater choice in office locations.
"Abu Dhabi has effectively been undersupplied in most real estate sectors for the past decade and greater choice certainly provides more options for occupiers."
In its latest report, Landmark Advisory said that in terms of apartments, rentals in Abu Dhabi have softened across the board with only a few exceptions. The average decline is around 5 per cent.
The report states the capital needs to compete on an infrastructural level with Dubai before people will show preference to living here.
"The biggest on-island declines were in the Corniche area where rents fell by 16 per cent," it added.