Both sales prices and rents dropped during the second quarter in the emirate
By Gerard Aoun, ZAWYA
Sales volumes in Abu Dhabi’s real estate market are expected to rise in the second half of 2020, as developers are likely to offer a bevy of incentives to serious buyers, a recent report by global real estate services firm Chestertons showed.
“While we expect Abu Dhabi to see falls in sales prices over the second half of 2020, generous developer incentives, such as extended post-handover payment plans, initial service charge waivers and discounted prices should serve to support transaction volumes,” Chris Hobden, Head of Strategic Consultancy, Chestertons MENA.
“Further initiatives, by both UAE and Abu Dhabi authorities, to support an economic recovery over 2021 bode well for the capital’s real estate market medium term,” Hobden said.
The Abu Dhabi Department of Municipalities and Transport (DMT) exempted individuals and companies from 34 real estate registration fees until the end of 2020.
These include a 2 percent sale and purchase fee, 2 percent off plan sale fee in addition to other fees like land exchange fees, mortgage registration, mortgage transfer, mortgage amendment and mortgage redemption.
Abu Dhabi’s residential sector was also supported by a rise in the loan to value ratio (by 5 percent) for first-time buyers introduced by the Central Bank of the UAE (CBUAE).
Q2 2020 review
Both sales prices and rents in Abu Dhabi dropped moderately during the second quarter in light of the COVID-19 pandemic.
“The most significant ongoing threat to the rental sector comes from a fall in demand driven by rising unemployment and declining income levels for private sector workers. The second quarter witnessed a rise in unemployment, especially across travel-related sectors, and a further fall in Abu Dhabi’s expatriate population presents a clear risk moving forward,” Hobden said.
Average apartment prices fell by 1.4 percent according to the report, while villa prices dropped 1.3 percent quarter on quarter (Q-o-Q).
In the apartment market, Al Ghadeer saw the highest price declines Q-o-Q, with average apartment prices falling by 2.1 percent. In the villa sales market, Al Raha Gardens saw the highest declines Q-o-Q, with average prices falling by 2.2 percent.
According to the report, average apartment rental rates fell by 2.2 percent while villa rents dropped by 2 percent.
Al Ghadeer witnessed the highest average rental decrease in the apartment and villa sector, with average rents dropping by 4.2 percent and 4.4 percent.
“With Abu Dhabi’s economy forecast to rebound next year, we expect to see greater stability across residential prices and rents over 2021,” Hobden added.
(Reporting by Gerard Aoun; editing by Seban Scaria)
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