Abu Dhabi rental rates are expected to fall by another 10 to 20 per cent next year, with more than 24,700 new homes scheduled for completion.
“There will be an extremely competitive environment next year,” Paul Maisfield, general manager at the Abu Dhabi office of the property company Asteco, said yesterday.
Rents have been falling throughout the country as more projects are completed, making homes more affordable. Dubai rents have dropped more than 40 per cent in some buildings since the peak of the market.
In Abu Dhabi, a two-bedroom apartment in a prime building in the Corniche now rents for Dh152,500 a year, compared with Dh160,000 at the end of the first quarter, a 5 per cent drop, according to Asteco’s data.
Rents were essentially unchanged in the fourth quarter.
“They have come down to the point where they are flattening out,” Mr Maisfield said. “But I do think that is temporary.”
There is pent-up demand for the new properties, Asteco says. A total of 10,280 homes – 6,680 apartments and 3,600 villas – were handed over in 2011, far fewer than expected owing to delays in handovers.
“A lot of people have been waiting in the wings,” Mr Maisfield said. “They can see the property coming.”
Top-end properties such as the new St Regis villas on Saadiyat Island and Etihad Towers on the waterfront will be more resilient to the competition, Asteco says.
“The biggest correction will be in the mid-market,” Mr Maisfield said. “Landlords for the first time will be experiencing high vacancy levels.”