Rents in the capital have fallen sharply as a tide of residents opt instead for Dubai's lower prices and newer buildings.
Abu Dhabi rents fall to compete with Dubai
ABU DHABI // Rents in the capital have fallen sharply as a tide of residents opt instead for Dubai's lower prices and newer buildings. Apartment rentals in Abu Dhabi fell by up to 35 per cent between March and June. The price reductions were further fuelled by redundancies and tenants relocating out of the city centre, according to a report published yesterday by Asteco, a property services firm.
It follows decreases in rental values of up to 20 per cent in the first three months of the year. While areas including Khalidiya and the Corniche have retained their value, neighbourhoods such as Salam Street, the site of a huge redevelopment, have seen rents plummet. Poorly maintained flats with window-mounted air-conditioning units have been the hardest to let. As well as finally accepting that they cannot hold rents artificially high, landlords are increasingly willing to accept payment in two cheques as opposed to one, estate agents reported.
But rents for a one-bedroom flat in the capital still average at least Dh20,000 (US$5,440) above those in Dubai, leading still more people to consider commuting. "There is a definite trend of people relocating to Dubai while working in Abu Dhabi," said Jesse Downs, the head of research at Landmark Advisory, who also reported a decline in Abu Dhabi rents in the last three months. "There are three major factors pushing people: availability, price and quality of apartments in Dubai.
"People are looking at it in terms of an equation. They can either work and live in Abu Dhabi and accept they will not have to commute, but will pay a much higher rent for an older property with fewer facilities, or they can pay a lower rent with better extras but have to commute." The Khalidiya and Corniche districts remained Abu Dhabi's most sought-after locations, while prices in districts such as Mushrif, Hamdan and Passport Road have levelled off, according to the figures from Asteco.
The average rent of a one-bedroom flat in Abu Dhabi dropped by more than 28 per cent in the second quarter, while similar-sized properties in Muroor, Khalifa and Salam Street fell by 35 per cent, according to Asteco's regional research manager, Judy Lam. At the top end, one-bedroom flats in the Corniche were priced at Dh130,000, while similar flats in Khalidiyah rented for Dh127,000. At the other end of the scale, a one-bedroom flat in Musaffah rented for Dh87,000, according to the data.
Averages in the Tourist Club area, Muroor, Hamdan, Passport Road, Khalifa Street, Salam Street and Airport Road were about Dh105,000. The rent drops are partly a result of an influx of new villas and flats becoming ready in the last 12 weeks. An estimated 500 villas have hit the market in Al Raha, 300 in Sas Al Nakheel and a further 100 in Khalifa City. In addition, 20 apartment blocks have been opened in the capital, with more than 600 new units.
"We expect these [rent] drops to continue until the end of the year," said Andrew Chambers, the managing director of Asteco. "Around November and December we will expect to see the rents across the capital level off. "That is when people will have returned from their holidays, even more new stock will have become available and people will start recruiting again. "A lot of people we have spoken to said they were going away for the summer and would re-examine the situation when they return."
According to the report, rental rates held during the first few months of the year. Since April, however, landlords have become more flexible and are dropping their prices in line with demand, it said. "This trend may increase as more apartments and villas are delivered in investment zones, because a greater number of expatriate owners may be willing to accept several cheques in return for a higher rent," added the report.
Nirvine Ali, the operations director at Remax Absolute estate agents in Abu Dhabi, agreed that rents had fallen, but said she did not expect them to drop further. "I think prices have already reached the bottom," she said. "A lot of people want to get their new homes arranged in Abu Dhabi before the school term begins. We expect July and August to be quiet and then it will begin again in September."