CBRE Reports A Decline Of 24% In Abu Dhabi Residential RentsThursday, August 16, 2012
As per the report of real estate consultant, CBRE, rents of residential property in Abu Dhabi fell by nearly a quarter in last year. The declining trend of Abu Dhabi property is likely to ease by new visa regulations which were announced earlier this year.
The report also highlights, compared to previous quarter, rental rates of residential property in Abu Dhabi declined by 4% in second quarter. On the other hand, compared to year ago quarter, residential rents fell by 24% in second quarter.
This fall in rental rates has recorded after introduction of new regulations which require a valid tenancy contract from foreign residents to obtain visa. The visa law amendment in Abu Dhabi has raised concerns for the lower income foreigners living in Dubai, since they would be directly impacted by this amendment.
CBRE’s report also added that for a large portion of population of Abu Dhabi, affordability is a concern. The amendment in visa law may impact the portion of population living in shared accommodations. The large portion of population lives in shared accommodations and the new visa rules will increase housing costs for them.
If government implements the proposed amendment and enforces no sharing policy, the demand of property for smaller units can go up. This amendment will require residents sharing accommodations in Abu Dhabi to provide a letter from the employer confirming their address and proof of residence. Whether there are plans to extend the requirement in other six emirates making up the UAE or not and when the change will be introduced is yet not confirmed.
During Q2, rents of prime offices remained flat whereas rents of low quality units continued their trend of falling. Since the start of 2012, rental deflation has averaged around 8% in Abu Dhabi and the office products whether inferior or superior continued to suffer from it. The report also added that there is evident disparity between good quality property and lower grade property. The rent is as low as AED 750 per sq m for poor spaces in Abu Dhabi.
Though during the first six months of the year, 2,161 new commercial licenses were issued in federal capital yet landlords, in order to attract tenants, still had to offer easy payment schedules and incentive packages. The report also revealed that demand of property by companies seeking smaller accommodations having area between 200 sq m and 500 sq m is quite prominent in the market.