Residential rents and sales prices have continued downwards in Abu Dhabi, owed to cautious investor sentiment, weak demand and increased supply, new research by real estate consultancy JLL has found.
In its second quarter report, released on Monday, the group found apartment rents in the UAE capital declined by a further 2% between April and June this year, compared to the same period in 2017.
This drop translated into a 99% year on year decline – attributed, JLL said, to “continued increase in supply completions at time when there has been a contraction in employment levels”.
Increases in residential market vacancies during 2018 will also contribute to rental declines, the report found.
Sales prices fared even worse, continuing to fall on the second quarter of 2017.
Average prices for prime villas registered a 7% decline in Q2 2018, denoting a 19% year-on-year decline, with apartments in the capital seeing a 3% decline on Q2 2017 to reach approximately $2994.7 9 (AED11,000) per sq m for both apartments and villas.
“Weakened sentiment has directly impacted liquidity, causing vendors to decrease pricing to capture market demand,” the report read.
“We anticipate this trend to continue unless the announcement of government spending creates an influx in demand after the summer.”
Despite its downward predictions, JLL said the UAE’s decision to allow 10-year visas for expats and 100% ownership in companies is expected to have a positive effect on the residential market – “providing expats with more security over their rights to remain in the UAE”.
The report followed an announcement by HH Sheikh Mohamed Bin Zayed in Q2 this year regarding a three-year $13.6bn (AED50bn) economic stimulus for Abu Dhabi.
Initiatives, as part of the package, affecting the real estate sector include reducing costs for developers, promoting partnerships between public and private sectors, and providing dual licenses for companies located in the free zones to bid for an undertake government tenders outside the free zone.