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Abu Dhabi Apartment Rents Static

ABU DHABI — Apartment rents in Abu Dhabi were largely unchanged in August, indicating a third consecutive month of stability in the capital emirate’s rent market, according to a survey by the Khaleej Times and property management firm Asteco.

The survey’s findings, used to create the KT-Asteco Rental Monitor, showed that rents for apartments in most areas of Abu Dhabi did not vary from the levels prevailing in June and July.

Previous editions of the survey found that Abu Dhabi rents were declining until June, due to a growing availability of units, a cash squeeze experienced by many tenants, and an internal shift of population, to name a few of the most important factors. But that downward trend paused in July, when rents plateaued at the prior month’s level.

The latest edition of the survey found that the potential tenants still face a cash crunch. Employers are known to have reduced the housing allowances they had been paying to their staff during the boom period last year, against the backdrop of the ongoing economic recession. Some firms have downsized and shed higher paid employees.

So, many hard-pressed tenants are adopting a “wait and watch attitude” to their renting decisions, according to Judy Lam, Regional Research Manager for Asteco Property Management.

Landlords, for their part, are unwilling to reduce their asking prices in the hope that rents will go up in the near future. Existing tenancy rules in Abu Dhabi put a five per cent cap on annual rent hikes, so landlords are disinclined to drastically reduce their rents; they can hike their rents by five per cent only after one year and even if the market shoots much higher.

Transactions continue at a slow pace, as tenants delay their decisions in anticipation of a further decrease in rents after the current Ramadan holiday season. Landlords are hoping the reverse will happen. The average rentals for one-bedroom flats on the much sought-after Corniche, Khalidiyah and Bateen areas, and on up-scale Khalifa Street and Salam Street, remained unchanged at Dh120,000 in June and July and again in August.

Average rates for two-bed apartments in these areas stood at Dh150,000, while average rents for three-bedroom flats also were unchanged at Dh180,000, the survey found.

This stabilisation in rents differed from the trend in April and May, when the average rents for one-bedroom apartments came down from Dh150,000 to Dh120,000 in these same locations. Average rates for two-bedroom flats dipped in this earlier period from Dh180,000 to Dh150,000, and rents for three-bedroom flats slide from Dh255,000 to Dh180,000.

The current, more stable trend in rents held also for apartments in Passport Road, Defence Road, Tourist Club Area, Airport Road, Hamdan Street, and in outer areas such as “Between the Bridges,” Mohammed bin Zayed , Khalifa A and Khalifa B, the survey showed.

The average annual rent for a one-bedroom apartment on Passport Road, Defence Road, Tourist Club Area, Airport Road, or Hamdan Street was about Dh100,000 in June, July and August. Two-bedroom apartments were being rented for about Dh120,000, and three bedroom flats for Dh150,000 in these same three months.

The trend was different in April and May. At that time, the average rates in these areas came down from Dh125,000 to Dh100,000 for one-bedroom flats, from Dh165,000 to Dh120,000 for two-bedroom flats, and from Dh190,000 to Dh150,000 for three-bedroom units.

· ramavarman@khaleejtimes.ae

Judy Lam is the Regional Research Manager at Asteco