Abu Dhabi’s residential real estate market has continued to stagnate during 2017, with tenants and buyers opting for more affordable options, a new report finds.
According to the Cluttons Winter 2017/18 Abu Dhabi Property Market Outlook report, the rate of decline in rents across the city’s residential investment areas slowed to -1.8% in the third quarter, from -3.6% in Q2. The annual rate of change has however slipped further to -11.8%.
Edward Carnegy, head of Cluttons Abu Dhabi, said, “With household finances under pressure due to a reduction in housing allowances, the removal of various subsidies and the impending introduction of VAT in January 2018, tenants are focused on value for money, as well as quality”.
The report indicates that the rental market has been relatively more buoyant than the sales market overall, with higher levels of activity compared to this time last year.
A lot of this demand stems from households relocating to make savings and to take advantage of incentives being offered by landlords, Cluttons found.
Carnegy said: “Due to the sustained drop in demand, we have seen developers respond by offering attractive payment plans, as well as bringing residential developments through that are far more affordable than what we have seen previously.
Due to a range of “complex factors” Carnegy continued, rents are now expected to end the year 10% to 12% lower than the end of 2016.
Rents are likely to slip by a further 5% to 7% in 2018, unless there is a notable rebounding in economic growth, which according to Carnegy, seems unlikely at this stage due to the oil price.
Cluttons previously forecasted rents to end 2017 8% to 10% down on 2016 across Abu Dhabi’s freehold residential investment areas.