- Sales prices and rents fall for apartments and villas in most districts
- Declines help make city more affordable
- Slump blamed on spending cutbacks as oil sector adjusts to low crude prices
Slackening demand has sent residential sale prices tumbling in Abu Dhabi and rents have also declined in most districts, making the UAE’s capital more affordable following prolonged government austerity measures, Propertyfinder Group’s exclusive UAE Real Estate Trends 2017 report reveals.
Abu Dhabi is the seat of the federal government and home to the country’s oil industry, which dominates the emirate’s economy. The sustained slump in crude prices since mid-2014 led to big cuts in oil sector investment and the knock-on effects for the real estate sector show little sign of abating.
Sales prices for Abu Dhabi villas fell in six of eight districts in the six months to March 31, 2017, according to exclusive data from Propertyfinder Group, the Middle East and North Africa’s leading real estate portal.
Al Raha Gardens dropped 11.8% to 843 dirhams per square foot, while Saadiyat Island remains the most expensive neighbourhood at 1,504 dirhams per sq ft despite a 5.2% decline. Only Hydra Village, up 0.7%, and Al Salam Street, up 1.6%, bucked the negative trend.
Villa rents followed a similar trajectory, falling in six of seven districts. These ranged from Al Reef’s 10.9% plunge to Al Salam Street’s 3.0% decline. Al Raha Gardens’ rental values rose 1.6% despite the double-digit slump in sales prices. Declines seem uncorrelated to the relative cost, with affordable, mid- and up-scale districts all seeing rents slip.
“Rents continue to decline in Abu Dhabi where a reduction in government spending in direct correlation to sluggish oil prices has reduced employment and demand for housing in the capital,” states the Propertyfinder report, which is available for free download at propertyfinder.ae and covers the villa and apartment sectors in Dubai, Abu Dhabi and the Northern Emirates.
For apartments, Saadiyat Islands posted a 6.1% drop in sales prices to 1,436 dirhams per square foot, slipping below Al Raha Beach where prices retreated a more modest 3.0% to 1,479 dirhams per sq ft. All districts saw prices fall apart from Al Ghadeer, which rose 1.0%, and Yas Island, up (0.6%).
“Al Ghadeer sits on the Dubai border and although technically in Abu Dhabi, is closer to Dubai’s commercial and lifestyle centres than to those in Abu Dhabi,” the report states.
While apartment buyers seem scarce in Saadiyat, the leisure and tourism destination remains highly sought after by tenants, with rental values increasing 3.9%. It was the only apartment district to make gains over the period, with one neighbourhood unchanged – Al Raha Beach – and five down. The latter group included some of the capital’s most popular districts such as Al Reef (-8.4%), Al Reem Island (-8.1%) and the Corniche (-5.2%).
The residential property sector in the Northern Emirates of Sharjah, Ajman and Ras Al Khaimah has proved more robust.
For sales, apartment prices rose 1.2% to 537 dirhams per square foot. Villa sales prices dipped 1.3% to 563 dirhams per sq ft, but are only 18% below Abu Dhabi’s cheapest district, Hydra Village. For rentals, villas rose 4.3%, but apartments slipped 1.7%.
“Prices have been more stable in the Northern Emirates. Always the cost effective option for budget conscious renters and buyers, many of whom commute to and from Dubai each day,” the report added.
“Prices moved up and down in the very low single digits across the Northern Emirates in both sale and rent over the past 6 months.”