Oversupply and the ongoing economic uncertainty continue to put pressure on Abu Dhabi’s residential real estate market, according to the latest Q2-2017 report from property company Chestertons MENA.
“Prices are expected to remain under pressure throughout the remainder of the year due to the flat economic sentiment and the launch of several new residential projects compounded by a lack of investor confidence,” explained Ivana Gazivoda Vucinic, head of advisory and research, Chestertons MENA.
Furthermore, according to Vucinic, the sluggish economic growth of the Emirate is expected to have a detrimental impact on government spending which in turn could lead to a drop in property prices because of high vacancy rates caused by job losses.
Sales prices on average decreased by 3% for apartments during the second quarter of the year. There were single-digit decline in purchase prices for properties in Al Reem island, Khalifa City, Al Ghadeer, Al Reef and Al Raha Gardens.
It was a similar story for Abu Dhabi’s rental market. Average apartment rents fell by 3%, with only Al Raha Beach area showing a miniscule 1% increase.
Vucinic expects to see residents continuing to downsize their accommodation and moving to more affordable areas as companies cut back on accommodation allowances.
“Sales prices and rents are expected to remain under pressure during 2017 as the market sees decreased demand,” she added.