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It's a good time to buy and rent homes, offices in Abu Dhabi

Abu Dhabi experienced a further decline in residential sale and rental prices in Q1 2017 compared to Q1 2016, as well as a decline in commercial and retail property prices, which is expected to continue throughout the year. These are the findings of a report released by dubizzle Property in collaboration with real estate investment and advisory firm JLL.

Villa projects experienced the steepest year-on-year decline in sales prices. Golf Garden Villa prices ssdropped by 11 per cent compared to last year. A decline was also recorded for villas in Al Raha Beach (eight per cent), Al Reef (six per cent) and Al Zeina (four per cent), while Saadiyat Beach Villas experienced no change compared to last year.

Similarly, apartment sale prices decreased with Al Reef Downtown and Al Reem Island apartments dropping by four per cent and seven per cent respectively. Al Bandar experienced the sharpest decline (21 per cent), followed by Sadiyaat Beach Apartments (seven per cent). Al Ghadeer Village apartments, however, experienced an increase in sale prices by two per cent.

The continued reduction in transaction volumes and sentiment in the capital saw property sale prices decline in 2016, which has continued into the first quarter of this year.

"A decline both in the rental and sale segment is further expected in the capital - fragmented in nature, with some communities and property types to be affected more than others," said Ann Boothello, senior product marketing manager of property at dubizzle.

Residential rents within prime areas continue to decline because of higher vacancy rates due to challenges within certain industries such as petrochemical and financial services sectors in 2016, particularly affecting the higher-end segments and larger residential units.

The report revealed that rents for three-bedroom villas in Al Zeina, Al Raha and Al Reef decreased by eight to 12 per cent compared to last year. Two-bedroom villas were the most popular search properties in Al Reem Island for rent, which experienced the shallowest dip in price (seven per cent), while one-bedroom apartments declined the most (15 per cent).

"Abu Dhabi witnessed significant supply completions from 2009 to 2014 across all sectors due to major land releases following the launch of the 2030 plan and the creation of large-scale master developments across Abu Dhabi. This led initially to over-supply and increased vacancy rates, followed by market absorption as major government spending plans and improved sentiment fuelled demand," said David Dudley, head of Abu Dhabi office, JLL.

Approximately 3,100 residential units were completed in Abu Dhabi last year, mainly within Reem Island, Saraya, Danet and Rawdhat, bringing the total property stock to 248,000 units in the capital.

"Since 2015, annual supply completions have dropped to long-term lows as the market adjusted, liquidity tightened, developers became more cautious and due to the impact of tightened planning policy and the new real estate regulations. This reduction in annual supply completions is welcomed at a time of weaker demand. While demand has reduced largely due to the decline in oil prices and the resultant impact on government spending and sentiment, reduced supply completions have mitigated the extent of over-supply," Dudley added.

There are currently around 5,000 units scheduled for completion in 2017, however, dubizzle and JLL anticipate a significant proportion of this is likely to be delayed at the final stages of approvals and handover.

Future residential supply is expected to shift to the New Island Communities, particularly Reem Island, Yas Island, Saadiyat Island and Al Raha Beach.

- business@khaleejtimes.com