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Rent slide in Abu Dhabi to continue: Landmark

ABU DHABI - Rents will continue to slide in Abu Dhabi as more residential and commercial projects are completed and delivered in the capital, according to the forecast made by real estate consultancy firm Landmark Advisory.

Office rents have declined by 10 per cent since March in the capital emirate, while the price for residential apartments came down by nine per cent during that period. These declines are in addition to the 10 to 15 per cent fall experienced in the first two months of the year, according to the Leasing Guide for Abu Dhabi, compiled by Landmark Advisory in collaboration with LLJ Property.

“While asking prices for rents are not likely to decrease significantly in the coming months, we expect agreed rents to decline further as more landlords would be increasingly ready to negotiate, thus increasing the bid-ask spread, especially in the commercial market,” the reportreleased here on Monday said, quoting Jesse Downs, director of research and advisory services, Landmark Advisory.

Office rents in Abu Dhabi have declined by 10 per cent since March 2010, which now average at Dh 1,700 per square metre. “This is in addition to the initial 10 per cent decline registered by Landmark Advisory during the first two months of the year,” the Leasing 
Guide said.

The areasthat witnessed the biggest declines were the City Centre and Tourist Club areas where rents fell up to 20 per cent. Contrary to the general market trend, these areas experienced the biggest rent declines for low quality units. Other areas that saw significant rent declines were Khalidiyah and Corniche where prices decreased by 10 to 15 per cent.

“Activity slowed down considerably in the commercial market during the last month as companies are now waiting for the handover of higher quality supply at more competitive lease rates. This trend is likely to continue as we enter the summer months that historically experience low volumes,” said Andrea Menown, LLJ Property’s leasing manager.

On the apartments’ front, the latest report has found that rents have continued on a negative trajectory with an average additional decline of nine per cent since March 2010. Since the beginning of 2010, rents have declined by an average 15 per cent. “During the first quarter of 2010, low quality units experienced the largest rent declines,” said Ms Downs. “However, mid- and high-end segments declined as much as seven per cent during the second quarter. This is significant as these segments have traditionally been more resilient.

“This is primarily because the lowest quality units have already experienced a significant rent correction, while the mid- and high-end segments have remained relatively sheltered. Additionally, the mid- and high-end segment have seen more competition from new, higher quality supply entering the market in 2010.” Ms Menown added.

Location-wise, apartments in Khalidiyah, City Centre and Al Bateen experienced the highest declines, ranging between nine per cent and 14 per cent.

According to Landmark, rents in the villa segment continue to adjust since March — average rents declined by an additional 9nine per cent on the back of a five per cent decline during the first quarter of 2010.

ramavarman@khaleejtimes.com