Dubai: A two-bedroom apartment somewhere near the Corniche area in Abu Dhabi for Dh60,000? Or how about one in Khalidiya?
That’s right, a prolonged cooling off in Abu Dhabi’s residential rental market has seen locations suddenly more accessible for tenants. Units at older buildings in Corniche and Khalidiya are available in these rental ranges after going through a 15 and 14 per cent decline in the last 12 months, according to data from Asteco.
And these aren’t the only locations - and buildings - to go through a dip. ”Apartment and villa rents decreased by 9 and 5 per cent over the year,” said John Stevens, Managing Director at Asteco.
Even the most upscale of buildings are bearing the brunt of a cooling market. A two-bedroom unit at a prominent building on the Corniche can be had for Dh90,000-Dh120,000 after dipping 13 per cent since Q1-18.
Across Abu Dhabi, the only consistent demand has been for more affordable opportunities, as tenants looked to downsize their living requirements. “The highest (rental) decrease was recorded for mid and high-end residential units as tenants seek more affordable opportunities,” the Asteco report notes. “Whilst incentives such as multiple cheque payments and rent-free periods have become a norm in the lower to mid-end market, vacancy levels in many prime quality buildings increased significantly, as the discounts and incentives offered were insufficient to ensure tenant retention in a highly competitive market.”
But with the curtains going up on the latest edition of the Cityscape Abu Dhabi on Tuesday, developers are still angling for opportunities. Aldar Properties won itself some buyer traction after launching plot sales for the “Lea” located on the northern side of Yas Island. In all, there are 238 plots - from Dh999,000 - making up the Lea. Aldar has repeated the same formula that saw it net Dh1.6 billion from selling land at Alreeman, which it launched in January.
Just a few days ago, another developer dipped its waters with a whopping 400-hectare development - Jubail Island - and to be an eventual home to as many as 6,000 residents. Plots will be ready for handover from early Q1-2021.
As in Dubai, individual sellers are facing tough competition to convince buyers. It is showing up in the asking prices and what these properties are eventually selling for.
The research firm ValuStrat finds that “on average, a 10-20 per cent gap separates listed asking sale prices and our index,” the firm notes, adding that it estimates around 4,200 new homes were delivered in Q1-19.
As for Asteco, it reckons that 3,600 units were handed over during this period. “Sales transaction activity remained low in Q1-19 with demand
for offplan and newly delivered properties outweighing that for completed units available in the secondary market,” its report notes.
“Average apartment and villa sales prices recorded annual declines of 8 and 4 per cent, respectively.”
Whichever way one looks at it, buyers and tenants will continue to call the shots in Abu Dhabi,
It’s offplan all the way in Dubai
Shrugging off a difficult year, developers in Dubai are back to doing what they like best - have new launches. And buyers responded in kind snapping up offplan deals all through the first three months of 2019. On the supply side, Asteco reckons well over 6,700 new homes being delivered during this timeline.
As for rental demand, “There has been a marked squeeze at the upper end of the rental range, with an increasing number of price-conscious tenants opting for lower price points, irrespective of location, size or quality,” Asteco reports. “The number and range of incentives has increased with rent-free periods, now of up to three months, being the most popular. Others include the absorption of agent fees, lower security deposits and the inclusion of DEWA bills, maintenance or chiller charges.”