Abu Dhabi’s residential property market saw further downward adjustments in the sales and rental sectors as witnessed throughout Q4 2019; mainly due to new supply and reduced levels of demand.
The downward price corrections witnessed in Q4 2018, have continued in Q1 2019, with average sales prices for apartments and villas down 3% and 1% respectively from the previous quarter. One of the biggest challenges facing the Capital’s residential sales market, continues to be oversupply. With over 11,000 units expected to be delivered in 2019, the market is likely to continue to soften throughout the year.
The downward adjustment in rental rates in Q4 2018, also continued in Q1 2019. Average rental rates were down 3% for apartments and 2% for villas from the previous quarter. As with the sales market, Abu Dhabi’s rental market continued to be hampered by new supply entering the market and reduced demand as a result of corporate consolidations and cutbacks.
Whilst the downward corrections continue to be a dominant theme in the Capital’s residential real estate market, due to restrained economic conditions and oversupply, the outlook for the medium and long-term for the UAE is encouraging. At a Government level, this is fuelled by a clear commitment to economic progress. This includes the AED 50 billion stimulus package set to be rolled out this year, as well as new visa rules to encourage expatriates to stay longer and invest in the Emirates.
From within the industry, developers are bringing new, lower cost products to the market to meet demand. Whilst the combined effects of such initiatives is expected to have a positive impact on Abu Dhabi’s real estate market, the rate at which is it realised depends on the speed at which they take to generate demand. Until that time, buyers and tenants are likely to remain cautious.