Property prices in Abu Dhabi are set to fall further as 11,000 apartments and villas are completed before the end of the year.
In its latest quarterly report on the housing market, Jones Lang Lasalle (JLL), a global property broker, said Abu Dhabi's real estate sector is becoming increasingly competitive, having seen "unsustainable" prices in the last five years.
"Rents are expected to decrease further in line with future additions to supply," said the report. "Significant increases in supply across all sectors during a time of relatively weak demand and tight economic conditions are causing rents to correct from the unsustainable highs of the boom years."
JLL added that average residential asking prices fell 4 per cent in the second quarter of this year to Dh10,500 per square metre, which translates to a decline of 51 per cent from the peak of 2008.
Rents also fell 4 per cent in the quarter to about Dh120,000 for a quality two bedroom apartment, with Al Raha Beach and Reem Island suffering the most significant declines in the past year due to the level of new homes completed.
JLL did note that many new projects could be delayed in the final stages of completion, affecting supply and the rate of price declines.
Approximately two thirds of the upcoming supply in properties is made up of apartments, while the majority of new villas will be completed in predominantly Emirati communities of Al Falah and Watani.
"Due to the significant development pipeline, rents will continue to experience downward pressure as the residential sector becomes more competitive, providing tenants with better opportunities to upgrade their housing," the report added.