Almost 2,400 units expected to come to market in 2017 at Reem Island
Prime and mid-prime villa values in Abu Dhabi are anticipated to fall by at least 15 per cent, while apartments are anticipated to trail at seven per cent, the latest market outlook for 2017 from Core Savills has reported.
Mid-market communities, particularly buildings with smaller units are predicted to maintain relative sale and rental price resilience and stay flat. The reinstatement of the five per cent rental cap has been received with mixed reviews as some tenants are apprehensive that landlords may interpret this law as an opportunity to increase rent by five per cent, while the three per cent municipality fee payable by expatriate tenants, is adding stress to overall rising household costs.
Core Savills CEO David Godchaux said: “We have seen landlords in mainland areas, who have been inflexible with renegotiating better rents, losing tenants to outer, more affordable areas. Interestingly, this migration is statistically under-reported and is artificially feeding stock in these outer areas. This may act as a risk for developers who overestimate potential demand for the outer mid-market communities due to the spurious swell in demand stemmed from the lack of elasticity in prices in core areas.”
On Reem Island, almost 2,400 units are expected to come to the market in 2017. Core Savills maintains that this excess supply will be hard to absorb and is expected to cause a noticeable drop in both rental and sales values. However, some of this stock is anticipated to be absorbed by expat tenants currently renting in the mainland who aspire to be on Reem Island due to better build quality and infrastructure, and may consider the move because of the rental rate drops.
Reidin’s UAE Residential Property Price Indices for December 2016, also revealed that Abu Dhabi apartment sales prices registered a decrease in December 2016. Prices decreased 1.05 per cent month-on-month, and also decreased 2.63 per cent year-on-year. Villa sales prices also registered a decrease in December 2016, with prices decreasing 0.74 per cent month-on-month and 4.99 per cent year-on-year.
Apartment rental prices in the capital also registered a decrease in December 2016, falling 0.98 per cent month-on-month and 3.03 per cent year-on-year. Villa rental prices similarly registered a decrease in December 2016, falling 1.01 per cent month-on-month, but increased 0.13 per cent year-on-year.
Reidin’s outlook for Dubai showed that apartment sales prices registered a decrease in December 2016, with prices decreasing 0.25 per cent month-on-month and 0.90 per cent year-on-year. Villa sales prices registered a decrease in December 2016, falling 0.04 per cent month-on-month, but increasing 1.60 per cent year-on-year. Apartment rental prices decreased 0.02 per cent month-on-month and also decreased 4.57 per cent year-on-year. Villa rental prices decreased 0.15 per cent month-on-month, and also decreased 7.79 per cent year-on-year.
SOURCE: Khaleej times Feb 4, 2017 – http://www.khaleejtimes.com/business/real-estate/abu-dhabi-villa-prices-seen-to-drop-15