Property sales in Abu Dhabi are expected to remain weak for the remainder of 2009, but are likely to stabilise during 2010, according to the latest report – rents in the emirate are also falling and landlords will need to adopt a more flexible approach to stay competitive, the report from consultants CB Richard Ellis says…
The second quarter of the year was a testing time for the Abu Dhabi property market with demand weakening across all market sectors.
‘Remarkably, this same period last year was epitomised by rampant growth when momentum in the real estate market appeared unstoppable.
The swift and abrupt end to off plan sales activity is reflected in declining sales prices universally,' it says.
The situation is unlikely to improve in 2009.
‘Investment decisions remain on hold with minimal activity expected before the final quarter as we enter the traditionally quieter holiday period followed by the holy month of Ramadan,' the report predicts.
Analysts say that both developers and investors are more attentive to fluctuations of key market indicators and vigilant on where exactly this current downturn can go.
But there are some encouraging signs in terms of price stability with declines slowing.
Overall prices and sales during the third quarter were at an extremely low level. Average sale prices for high-end apartments and villas started from Dh11,300 per square meter and Dh8,600 per square meter, respectively.
In the rental market rates fell significantly during the first six months of the year but the decline slowed down in the third quarter, particularly for housing units situated within the central business district.
Apartment rents in central locations dropped by around 5% compared to the second quarter, while many apartment rents actually remained unchanged.
The report says that average annual rents for a one bedroom apartment in the city centre range from Dh100,000 per annum to Dh130,000 per annum, while prime units are still in excess of Dh140,000 per annum.
‘Low levels of investment reflected the unmatched expectations of both existing investors and potential buyers with owners of properties reluctant to succumb to lower values in anticipation of a positive cyclical spin, while buyers are wary of a continued downturn in asset values,' said Matthew Green, Associate Director, CB Richard Ellis Middle East.