Further drop in rentals expected in Abu Dhabi

Abu Dhabi: Abu Dhabi residential market will continue to see further drops in rentals in 2018 but the reduction is not expected to be at the same pace as in 2017, experts told Gulf News.

“We will see a further fall in rentals of between 4 per cent and 7 per cent this year,” said Andrew Ausama, associate director of Core Savills consultancy in Abu Dhabi.

He said developers of residential units could withhold stock or delay development of new buildings due to the trend.

“Landlord investors who have leveraged their assets may have increased pressure to avoid vacancy of their assets and are encouraged to reduce rents and offer attractive payment terms of six to 12 cheques per year.”

Property consultancy Asteco in a recent report said that average apartment rental rates dropped by 3 per cent over the third quarter in 2017 and by 10 per cent during the past 12 months, with the highest rate of decline recorded for mid-end properties and large units within prime and high-end projects.

Tahir Mahmoud, sales executive, Abu Dhabi-based Foot Print real estate, also expects further pressure on rental rates in 2018.

“We expect at least 6,000 units to be ready in Reem Island alone,” said Mahmoud.

Giving a breakdown of expected reductions this year, he said a one-bedroom flat might go down from Dh70,000 to Dh60,000 in Reem Island and from Dh60,000 to Dh50,000 in downtown Abu Dhabi.

Two-bedroom flats will be available for Dh60,000 per annum in downtown in Abu Dhabi.

“There has been a reduction in rents across Abu Dhabi. We are expecting this trend to continue this year too. VAT (Value Added Tax) too will have an impact though not directly as the tax is not applied to residential rents.”

Lack of parking spaces in downtown Abu Dhabi is also likely to impact rents as residents will opt for places such as Shahama or Mohammad Bin Zayed City on the outskirts which offer a plenty of parking.