Housing prices in Abu Dhabi are expected to fall for at least another year, Jones Lang LaSalle predicts.
Rental prices in the capital expected to keep falling
Rents and sale prices for apartments and villas in Abu Dhabi are expected to fall for at least another year as more than 16,000 homes are completed in the capital.
The latest research by the property consultancy Jones Lang LaSalle shows the slide in prices should make the city's property more attractive to buyers.
In its report, released today, Jones Lang LaSalle says more competitive prices will help to entice commuters living in Dubai.
"There really isn't much sales actually happening [at this point]," said David Dudley, the head of Jones Lang LaSalle's Abu Dhabi office. "We think [the market] will come back but it won't be this year."
More than 16,000 new apartments and villas will come on to the market next year, compared with 8,200 last year, the consultancy reported.
The homes are focused on high-end residents living in the capital, although demand is strongest in the low and middle-income sectors.
Government initiatives to establish guidelines and regulations for the property sector are also essential to grow demand, Jones Lang LaSalle said.
"Significant legal and regulatory progress on such issues will help improve transparency, boost investor confidence and encourage demand for Abu Dhabi property," the report said.
Mr Dudley said consumer confidence was critical when it came to buying property.
"There will be more flexibility in mortgages and that will help," he said. "But what it really comes down to is consumer confidence."
Jones Lang LaSalle said that in the past two years there had been a fundamental shift in the market.
"Prior to 2009, demand was driven by speculators and long-term investors," the property consultancy reported. "But since the market correction in Q4 2008, demand has been dominated by end-users and primarily for rental."
The availability of new homes continues to drive down rents. Costs for apartments in older neighbourhoods dropped by 35 per cent last year. Overall in Abu Dhabi, they fell by 14 per cent in the same period.
Jones Lang LaSalle's perspective is in line with reports from other property agencies, which said rents were down between 8 and 10 per cent in the first quarter of this year.