Villa rents in Abu Dhabi have fallen 8% in the first three months of 2011 with lower quality properties suffering the most, according to the latest real estate report from management company Asteco.
This is on top of a 5% decrease in the last quarter of 2010 and according to Asteco, the high volume of new housing supply already delivered or due to be delivered have resulted in Abu Dhabi’s average leasing rates falling 8% for both apartments and villas.
‘On the main island, turnover is slow within the lower quality buildings, where tenants are taking advantage of capped low rental agreements. Among those that have become available, rents have reduced significantly and this is a trend we expect to become more pronounced,’ said Elaine Jones, Asteco chief executive officer.
Apartment rents also continue to decline, with landlords becoming more flexible on price, the report said. The declining prices are more evident at the lower quality end of the market, it added.
However, Asteco said that interest in good quality large villas is improving, as tenants, particularly families, are looking to up size. Rents have stabilised in areas surrounding Etihad Plaza and Golf Gardens.
‘On the sales side, prices for villas have remained relatively stable over the last quarter, with many owners remaining naturally reluctant to sell due to market conditions. Prices in Al Reef declined further, 15%, 6% and 8% for three, four and five bedroom units respectively,’ the report said.
In terms of apartment sales, the current trend in the first three months of 2011 is toward owner-occupiers rather than investors, the report pointed out. ‘Overall, investors remain cautious as they await stabilisation of rental prices. For those looking at buying homes, delays in handovers combined with mortgage financing difficulties are also hindering transactional volumes. But we expect the imminent new property deliveries and UAE’s improving economic performance will improve the situation,’ Jones explained.
The release of several delayed properties onto the Abu Dhabi residential market during the second quarter is set to result in a spell of increased rental and sales activity, real estate agency Cluttons said last week in its most recent market report.
Cluttons said that the long awaited delivery of projects like Sun and Sky Towers, and Marina Square’s RAK Tower, both on Reem Island, would end two years of stalemate in the UAE capital.