The downward price corrections witnessed in Q1 2019, have continued in Q2, with average sales prices for apartments and villas down 5% and 3% respectively from the previous quarter. That said, the Abu Dhabi Government has recently changed its real estate laws to allow foreign nationals to own freehold property in designated investment zones; a privilege previously enjoyed only by UAE and Gulf Cooperation Council (GCC) nationals. This is expected to have a marked impact on the Capital’s real estate market.
The downward adjustment in rental rates continued across Abu Dhabi’s residential sector in Q2 2019. Average rental rates were down 6% for apartments and 3% for villas from the previous quarter. Abu Dhabi’s rental market continues to be hampered by new supply entering the market and reduced demand, as a result of ongoing redundancies and companies providing lower rental allowances.
Whilst short term price and rental declines are unavoidable due to restrained economic conditions and oversupply issues, there is a more positive outlook for the Capital’s residential real estate market in the medium to long term. The new freehold law is expected to significantly bolster foreign direct investment and coupled with initiatives such as the 10 year residency visa, people will have the ability to put down roots in the country, which in turn will benefit many areas of the economy, particularly the real estate sector.