Rents to Slide in Abu Dhabi; Declines in Dubai

Apartment rents are likely to ease further in the coming months in Abu Dhabi, while the declining trend in Dubai is continuing, enhancing the leasing choices available for residential and office spaces, according to the study report for the third-quarter prepared by real estate services firm Asteco. Market dynamics will certainly persuade the landlords to be flexible in pricing in Abu Dhabi, as there is a continued hike in the housing supply. Also, prospective tenants are comparing the lower prices levels in Dubai and are increasingly showing an inclination to relocate to Dubai. Abu Dhabi continues to see an increase in the supply of residential property with almost 1,000 new apartments delivered to the market in the last quarter, predominantly in off-island locations, including Mussafah, Mohammed bin Zayed City and Khalifa Cit, the study report says. Research conducted by Asteco also found that around 400 apartments will come online this month on Abu Dhabi Island, in addition to a continued supply of apartments coming up in Khalifa City A.

Many of the apartments which have come online in the recent months were being leased out only slowly in the beginning, due to a mismatch between landlords’ rental expectations and those of prospective tenants. “This is only natural, discounting will be more prevalent when the market is faced with increased supply, including the ‘Dubai and Drive’ option where the differential in rental prices is still hard to ignore.”“As better quality units are delivered in Abu Dhabi over the next six to 12 months, including Marina Square and Sun and Sky Towers, many daily commuters will consider these developments. It is clear, however, that this significant group of prospective tenants will benchmark these developments against comparable properties in Dubai — particularly in Dubai Marina,” said Asteco Chief Executive Officer Elaine Jones in the report released here on Tuesday. “But many prospective tenants have to give notice to existing landlords, either husband or wife may still have a job in Dubai and of course there’s the schooling issue. So market demand dynamics will not necessarily settle down until next summer,” Jones said