Home prices in Abu Dhabi are down 45 per cent from the peak in 2008 as thousands of apartments and villas start to hit the market.
Prices stand at an average of Dh11,800 per square metre compared to Dh21,500 per sq metre three years ago, according to a report released Sunday by Jones Lang LaSalle (JLL).
More than 14,000 apartments and villas are scheduled for completion in the second half of the year, adding to the increasing competition for buyers, JLL reports.
At the same time, people who bought off plan are moving to sell their homes now that the projects are finishing. There has been an uptick in recent weeks in the number of listings for homes on Reem Island and Raha Beach, agents said.
Some owners are selling at a loss rather than making the final payment to developers, said Ahmed Nawab, chief executive of Trust City Real Estate, an Abu Dhabi property company.
"There are people in the market who need the liquidity, who need the cash," Mr Nawab said.
Apartments coming on to the secondary market are averaging 30 per cent less than the original purchase price from the developer, Cluttons said in its second quarter report.
Sales are hindered by the lack of available financing, "as banks within the UAE remain committed to 'repairing' their existing balance sheets rather than adding to them," Cluttons said.
"The release of stock on Al Reem Island will certainly affect stock values elsewhere in Abu Dhabi and we foresee continuing price reductions for the foreseeable future," Cluttons reported.
RAK Properties announced this weekend that it would start handing over apartments in the 43-storey RAK Tower on Reem Island on July 27.
The number of transactions in the second quarter was "minimal," despite the growing supply of available homes, said David Dudley, head of JLL's Abu Dhabi office.
But he believes the worst of the price drops may be over. Prices remained stable in the second quarter, despite the shifts in the market, JLL reported.
"Prices fell very, very rapidly after the peak," Mr Dudley said. "That was really all about the end of the speculation sales market."