ABU DHABI Will 2016 favour tenants in Abu Dhabi? It appears so with many builders and property owners willing to negotiate rents as the market begins to slowdown.
Real estate agents say although landlords and builders have not announced rental reductions, units in some parts of Abu Dhabi are available for rents lower than what is officially quoted.
“The current market situation is definitely working in favour of tenants. Though builders have not officially reduced rents, some of my customers have managed to negotiate lower rents in some prime properties,” said an agent who works with Property Shop Investment.
The agent said he brokered a two-bedroom apartment for Dh130,000 and a three-bedroom for Dh160,000 last month in the Corniche area – both Dh10,000 less than last year’s price.
“It is good news for tenants in Abu Dhabi. Landlords are worried they will lose tenants unless they reduce rents,” said the agent.
Robert Bradley, a real estate agent who deals with Reem Island properties, said rent depreciation is a reality in newly opened residential complexes on the island.
“Considering the market situation, landlords know they have to offer competitive rents to attract tenants,” said Bradley.
He, however, pointed out that rents in prime properties like Gate Towers, Sun and Sky Towers and Arc Tower in Reem Island have remained unchanged since the beginning of the year.
“Most landlords are in agreement in terms of maintaining the current price. Personally, I feel in a few months they will have to rethink and reduce rents to retain existing tenants,” said Bradley.
Most agents attribute the rental market slowdown to job cuts and insecuriy.
“Job cuts have led to a spike in vacant residential units in Abu Dhabi. When there is an increase in supply, owners are cautious with the prices.
“And tenants are taking advantage by negotiating lower prices,” said M. J., an agent who deals with villa properties.
With prices of residential units falling in Dubai and stabilising in Abu Dhabi this year, market experts predict a fall in residential rents.
David Dudley, international director and head of the Abu Dhabi office of global real estate services firm JLL, said: “During 2016, we expect rents to remain relatively stable in some sub-sectors, and we expect to see a modest decline for other sub-sectors.”
For the residential market, he said while demand has certainly fallen, a major reduction in annual supply of completed projects has led to relatively limited vacancies in most sub-sectors of the market.
“Annual supply completions historically averaged 10,000 units per annum. However, current supply completions are at a fraction of that,” said Dudley.
Offering a different view, Asteco managing director John Steven said the Abu Dhabi market will see a slight increase in rents for some popular projects as well as some older buildings in Abu Dhabi City that didn’t increase their rates in 2015.
“In contrast to Dubai and the northern emirates, Abu Dhabi has a more limited pipeline due for completion during 2016 and as a result, vacancy rates are likely to remain low despite a potential reduction in demand,” said Steven.
“The underlying message is stability and marginal increases,” he said.
SOURCE: GULF NEWS