Thursday, July 16, 2009

Abu Dhabi rents fall to match Dubai

Rents in Abu Dhabi have fallen sharply, to compensate for the lower prices and new buildings in Dubai, as residents preferred to choose Dubai over Abu Dhabi for investments.

Recently, the apartment rentals in the Capital dropped 35 percent during March to June. The reduction in prices were fuelled by mass redundancies and with tenants relocating out of City Center, revealed the report by Asteco, a leading property services company.

This follows an earlier decrease in rental values at 20 percent during the first three months of the year. Areas including Corniche and Khalidiya have managed to retain their value, while neighbourhoods such as Salam Street, the site of huge re-development have seen a dip in rents.

According to estate agents, landlords have realized that they cannot hold rents artificially high, and are now willing to accept payment in two cheques, as opposed to one.

However, rents for a single bedroom apartment in the capital continues to draw an average of Dh.20,000, above that in Dubai, thereby causing more people to opt commuting.

The Research Head at Landmark Advisory, said "There is a definite trend of people relocating to Dubai, while working in Abu Dhabi. The three major factors for this trend are availability, price and quality of apartments in Dubai."

People are looking in terms of equation. They can either work and live in Abu Dhabi accepting the fact that they will not have to commute, but will have to pay a higher rent for older property with fewer amenities, or they can pay a lower rent with better amenities but have to commute.

The Corniche and Khalidiya continue to be the most sought-after locations in Abu Dhabi, while prices in districts such as Hamdan, Mushrif, Passport Road all have leveled off.

The average rent of a single bedroom apartment in Abu Dhabi dropped by 28 percent or more during the second quarter, while rent for similar sized properties in Khalifa, Muroor and Salam Street fell by 35 percent, said Judy Lam, Regional Research Manager, Asteco.

Single bedroom apartment in the Corniche were priced at Dh.130,000, while similar flats in Khalidiyah were rented for Dh.127,000. On the other hand, rents at single bedroom flats in areas such as Musaffah were Dh.87,000 as per the data.

The drop in rentals are partly due to availability of new villas and flats during the past couple of weeks. About 500 new villas have entered the market in Al Raha, 100 in Khalifa City and 300 in Sas Al Nakheel, while 20 new apartment blocks have been unveiled in the Capital.

According to Managing Director of Asteco, Andrew Chambers, the rent drops will continue until the end of the year.

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