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28 March 2024

Abu Dhabi rents dip 9% in Q2

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By Staff

Apartment rents in Abu Dhabi dipped by a further nine per cent in the second quarter of 2011 to extend a downward trend that pulled prices from their highest level after the 2008 global fiscal crisis, a local report said on Wednesday.

While prices and rents of villas recorded relative stability in the first half of this year, flat rents receded by around nine per cent as more new apartments come into the market, said the report by ASTECO, a key property management firm.

“During the second half of 2011, new housing units will enter the market in several sites in Abu Dhabi….this will put further downward pressure on rents and encourage tenants to look for other apartments with better value for money.”

The report said the completion of more housing projects in Raha Beach just outside the city and other areas is depressing rents.

Property agents said another key factor was a drive by Abu Dhabi authorities to flush hundreds of thousands of construction workers out of the capital and move them to accommodation areas built specially for them in the outskirts. More than 100,000 workers in the construction and other sectors have already moved out of the city while over 200,000 more are expected to shift out.

“The presence of a large number of vacant flats is evidence that rents are declining and becoming affordable in the capita,” said Ahmed Elaiwa, a real estate agent based in Abu Dhabi.

“The decline has completely reversed a previous situation where a landlord would warn a tenant to pay more or leave the flat….the situation now is that the tenant would warn the landlord to cut the rent or he will leave the flat.”

In a study last week, a Kuwaiti bank said apartment rents in Abu Dhabi dropped by about eight per cent in the first quarter of 2011 compared to seven per cent in the fourth quarter of 2010 while villa rents fell another eight per cent after a decline of nearly five per cent in the previous quarter.

Global Investment House said prices had already plunged by nearly 43 per cent between the fourth quarter of 2008 and the fourth quarter of 2010.

In Dubai, the global downturn depressed property prices by a whopping 55 per cent in just two years but the pace of decline is expected to sharply slow down in the next period, according to GIH.