Abu Dhabi rents fall as new supply hits market

Rental rates in Abu Dhabi dropped in the first quarter of 2012 as a wave of new supply began to hit the market, Asteco said on Monday. Apartments and villas in the UAE capital saw rents fall 5 percent during the three-month period as thousands of new units were handed over, the property broker said. The average annual rent for a two bedroom apartment on the corniche ranged between AED120,000 and AED160,000 in Q1, down 6 percent from the previous quarter. Rents for two bedroom apartments on Al Raha Beach saw an even bigger decline, falling some 14 percent quarter-on-quarter to rates of between AED105,000 (US$33,000) and AED150,000. According to the Asteco report, some 3,000 residential units are now being delivered at Al Muneera and Al Zeina at Al Raha Beach, while a further 1,455 units are ready for occupation at Marina Square, Reem Island. The remaining 2,030 units at Marina Square are expected to enter the market within the next six months. Villas rates fell 13 percent in MBZ and Mussafah, which the property firm said was due to large volumes of average-to-low quality stock being handed back to landlords. Sales prices for villas in Al Raha Gardens, Golf Gardens and Al Reef Villas remained relatively unchanged, suggesting good quality villa communities were still in high demand. Elaine Jones, CEO of the firm, said she expected rates for many apartments and villas to decline further as additional properties were completed. “The increase in supply in the higher-end segment of the apartment rental market in Abu Dhabi is likely to result in further downward pressure on rents,” she said.