Monday, April 05, 2010

Dubai rentals competitive, even as Abu Dhabi rents drop 10-30 percent

Rentals for apartments and villas in Abu Dhabi and neighbouring areas have dropped by 10 to 30 percent, say real estate agents.

It is for the first time in five years, that the supply of housing units in Abu Dhabi, has outgrown demand, particularly, in localities such as Mohammed bin Zayed City and Khalifa City A.

The agents expect that in a period of five months, rents will drop by about 30 percent when new buildings, including the 14 towers at the Al Reem Island are delivered to the market.

The UAE nationals who own housing units may try to resist their temptation and wait for months with empty units, although the drop in prices will get inevitable in 2011 and 2012 with several thousands of units entering the market.

The General Manager of Al Ghanem Real Estate, Abdul Rahman Al Shaibani, said that he hopes rents would drop by 20 percent inside Abu Dhabi and more than 40 percent outside the city during summer.

However, the Manager of Al Mamazar Real Estate, Ahmed Al Hammadi predicts that rents for new units in Abu Dhabi are unlikely to fall. He points out that it would not make sense to lease out two bedroom units at Al Reem Towers for less than Dh.200,000 as the cost for owners was very high.

But, he agreed that the new towers will affect the rent of the old units in Abu Dhabi, as few of the tenants with high incomes, may relocate to areas such as the Al Reem Island, Corniche, Airport, Khalifa, Electra and Muroor roads.

During the year 2009, high rentals in Abu Dhabi had compelled several residents to relocate to certain areas of Dubai, such as The Gardens and Discovery Gardens, in search of more competitive rental rates.

This year, even as there is a drop in rentals in Abu Dhabi, Dubai rents continue to remain competitive enough to offer a better choice to people, reveals a real estate analyst.

The Director General of Truth Economic Consultants, Ridha Musallam, also an economic expert, when speaking to the media, revealed that a rental decline of 10percent within Abu Dhabi city, and 40 percent in the outer areas is expected, although this will not bring Abu Dhabi employees living in Dubai, back to the Capital before the end of next year.

Musallam revealed that few major developers have even begun to freeze their housing projects to avert sudden huge retreat in rents. For instance, the three Etihad Towers, due for completion in June, has not stopped, despite completing the buildings and supplies.

The analyst explained that about 7000 units will be supplied within Abu Dhabi and the outside areas. In this case, there will certainly be a drop in rent. Abu Dhabi will also witness a drop in demand of up to 20 percent during summer, as several expatriates send their families home during this season.

1 comment:

Dubai Blog said...

There is no doubt that Abu Dhabi property market is thriving but Dubai real estate market is well established than other stats. The excessive supply of rental apartments will affect the market. There are some reports which showing that in future Abu Dhabi market will able to give tough time to Dubai properties.