The prices of homes in the capital are expected to drop further this year, after values dipped by 1 per cent in the second quarter.
Rents fell by about 2 per cent in the same period, according to property broker Chestertons.
The company said an average two-bedroom apartment in Al Reef Downtown now costs Dh108,000 a year, a reduction of Dh2,000 on the first quarter of the year. A two-bed apartment on Al Reem Island now costs Dh140,000, while at Al Bandar a two-bed unit costs Dh193,000.
Rents at the lower end of the market stood at Dh40,000 a year for studio apartments and Dh52,000 for one-bed units, it said. Declan McNaughton, the UAE managing director for Chestertons Mena, said the luxury sector had been hardest hit “due to a reduction in spending, compounded by cuts to government spending due to lower oil prices”.
“The remainder of the year will see marginal declines. However, solid yields will still prove popular with investors,” he said.
Chestertons Mena said average villa yields were 5.5 per cent because of limited supply, but smaller and less expensive units tended to offer higher yields.
“Apartments in Al Reef Downtown, Al Ghadeer and Al Muneera all notched yields of 8.8 per cent, 7.7 per cent and 7.5 per cent, respectively,” Mr McNaughton said.
Sales prices for apartments averaged about Dh1,340 per square foot, while villas fetched Dh1,088 per sq ft. The company said 500 new homes were completed during the quarter, but that it expects handovers to ramp up during the second half of the year, with an expected 3,500 new units being delivered.
This extra stock “will result in marginal fluctuations” in price, Mr McNaughton said.
By the end of 2018, about 14,500 new units will be added to the Abu Dhabi market, 80 per cent of which will be apartments and 20 per cent villas, according to a CBRE report last month.
Matthew Green, CBRE’s UAE head of research and consulting, said: “With a growing number of new projects in the pipeline, we expect to see an upward trajectory in annual supply in the coming years, with the majority belonging to properties oriented towards the upper-mid to high-end segments [of the market]”, he said.
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