Abu Dhabi house prices down 60% from peak

All property sectors in Abu Dhabi are in the downturn stage with average rents and prices likely to fall further in coming quarters, real estate consultants Jones Lang LaSalle (JLL) says in its latest quarterly update on the Abu Dhabi market.

“The previous boom in residential sales and prices (driven by speculative investment rather than end-user demand), came to an abrupt halt at the end of 2008, with prices having reached over Dh3,000 per sq ft in some developments.

“Since this time, the market has witnessed a major fall in pricing, with average prices continuing to fall to Dh1,100 per sq ft in Q3 2010,” the consultancy said in the report seen by Emirates 24|7.

“As new supply enters the market, landlords will become more flexible to maintain occupancy rates,” it said, adding that “[c]ompetition for tenants will be more intense as [neighbouring] Dubai rental rates continue to decrease.”

JLL points out that “[a]round 3,000 new residential units have been delivered in Q3 2010” and adds that another “3,500 units will be delivered by end of 2010.”

“The total current stock of 182,000 residential units is expected to reach 251,000 units by the end of 2013,” the consultancy estimates, indicating an additional 69,000 new residential units to enter the market in about two years, adding to market supply. However, it reckons that there remains a significant mismatch between the demand and supply of residential units, with the in-demand affordable housing segment witnessing “significant undersupply” whereas “the upper segments of the market are becoming over-supplied.”