Rate of Abu Dhabi property price and rental declines is slowing but a recovery has yet to be seen, according to new research
The rate of Abu Dhabi property price and rental declines is slowing but a recovery has yet to be seen, according to Core’s latest market report.
The real estate consultancy said Abu Dhabi is reaching a pricing floor where developers and landlords, particularly those who are leveraged, may not have room to drop prices any further.
It said the UAE capital's market is likely to bottom out "in the near to mid-term".
The report added that secondary sales prices continued to weaken across most apartment and villa communities, at a rate of 8 percent on average across the city over the past 12 months.
Prices in communities such as Al Raha Beach, Yas and Saadiyat Island saw relative resilience with lower levels of declines.
"We continue to see a flight to quality and affordability from both end-users and investors,” said Prathyusha Gurrapu, head of Research and Advisory at Core.
“With limited future supply, downward pressure on existing inventory is easing. Flight to quality continues to be seen across asset classes and the market is more elastic with a wider product range now catering to varied preferences and entry points – making Abu Dhabi increasingly attractive for end-users,” he added.
Prominent completions over 2019 include Parkside Residence in Reem Island, Park View, Al Noon Saadiyat and Soho Square in Saadiyat Island and part of West Yas Villas bringing nearly 3,000 units to market.
Potentially, an additional 1,000 units are scheduled to be handed over by end of 2019, with a further 5,000 units to be delivered next year.
"Over 2018 and 2019, the market gradually responded to relatively stable oil prices while developers also aligned with market demand and managed supply inventories accordingly, keeping realisation rates at around 50 percent. We expect this trend to continue over the near-term,” the report noted.
Andrew Ausama, head of Abu Dhabi at Core, said: “As most residential sales activity is concentrated in the off-plan segment, we predict new releases to continue witnessing a steady uptake on the back of attractive entry points and payment terms while secondary market stock is expected to remain challenged by newly delivered and off-plan stock - albeit keeping sales prices under pressure.
“Most downsizing activity across the private and public sectors has sustained over the last year. The resulting stability in housing allowances is helping the pace of rental drops to slow down. Unlike historical trends, villa districts displayed resilience compared to the last few years performance while apartments have witnessed the same level of drops as that of 2018,” he added.
