Abu Dhabi property yields increase as prices fall faster than rents
Office sector still sluggish but hotels market shows signs of recovery
House price values continued to fall across Abu Dhabi in the third quarter of the year, but with the decline in rental values slowing, the yields on offer to investors has increased, according to property consultancy ValuStrat.
House prices were 12.6 per cent lower year-on-year, but residential rental declines averaged 9.2 per cent.
“Abu Dhabi is enjoying relatively high residential yields across the board, this is due to the fact that rental value falls are slower than capital value declines,” said Declan King, managing director and group head of real estate at ValuStrat.
The weighted average residential value for an Abu Dhabi property was Dh9,505 per square metre for an apartment and Dh7,083 per square metre for a villa. Gross yields were 7.7 per cent for apartments and 6.6 per cent for villas.
Prices in both Al Reem Island and Al Reef declined by 15.4 per cent year-on-year, while villa prices at Hydra Village dropped 16.2 per cent. Unlike Dubai, however, the pipeline of new homes coming on to the market remains fairly limited, with only 1,733 new homes coming on to the market so far this year, out of a projected 5,590 units.
"Relatively modest new home supply in the capital is to be welcomed at this stage in the property cycle, coupled with reports of buyer demand for any sensibly-priced stock that is released by reputable master developers — these are both encouraging signs for the longer term recovery and sustained health of the residential property market in Abu Dhabi," Mr King added.
The company also said office rents in primary areas were 11.6 per cent lower year-on-year, and although average occupancy rates in the emirate's hotels was marginally lower at 74 per cent average room rates were up 10.9 per cent to Dh374. Revenue per available room climbed 10.5 per cent to Dh276.
Updated: October 14, 2019 11:26 AM