Abu Dhabi’s real estate market witnessed continued moderate declines, across both sales prices and rents, during Q2. However, with a raft of developer incentives and the proactive public policy response, sales volumes are expected to increase over the second half of 2020, according to the Chestertons’ Observer: Abu Dhabi Market Report Q2 2020.
Overall, the capital’s real estate market continued to see declines in sales values, with average apartment prices falling by 1.4 percent and villas by 1.3 percent q-on-q. The capital’s residential sector, however, was supported by a rise in loan to value ratio for first-time buyers introduced by the Central Bank of the UAE (CBUAE), coupled with the cancellation of the Abu Dhabi Municipality fee, equivalent to 2 percent of a property’s purchase price, in March 2020. Chris Hobden, Head of Strategic Consultancy, Chestertons MENA, said: “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.
“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.” In the apartment sales market, Al Ghadeer saw the highest price declines q-o-q, with average apartment prices falling by 2.1 percent, from AED 715 to AED 700 per sqft. Al Reef saw the second-highest fall in average prices, reaching AED 750 from AED 765 per sqft over Q1 2020, representing a 2 percent decline. Saadiyat Island saw the lowest average quarterly decline, with prices falling by just 0.7 percent to AED 1,370 from AED 1,380 per sqft in Q1.
Al Reef saw the highest price declines on an annual basis, at -7.8 percent, followed by Al Ghadeer at -6.7 percent, with average prices reaching AED 750 and AED 700, respectively. In contrast, Saadiyat Island was the most robust performing location on an annual basis, with average prices falling by just 2.1 percent, from AED 1,400 in Q2 2019. In the villa market, Al Raha Gardens recorded the highest declines q-o-q, with average prices falling by 2.2 percent to AED 675 per sqft in Q2.
The strongest performing locations were Khalifa City and Al Raha Beach Area, which witnessed declines of 0.6 percent and 0.5 percent q-o-q, respectively, with average prices at Khalifa City at AED 840 per sqft, and in Al Raha Beach Area at AED 1,065 per sqft. While Al Raha Beach Area performed well over Q2, higher than average falls over late 2019 led to an annual decline in average prices of 8.2 percent, down from AED 1,160 per sq ft in Q2 2019.
Al Raha Gardens and Al Ghadeer saw the most moderate yearly price declines of 3.6 percent, with average prices in both locations standing at AED 675 per sqft in Q2 2020, down from AED 700 in Q2 2019. Average apartment rental rates fell by 2.2 percent and villas by 2 percent, a sharper rate of decline than experienced in Q1, a result of the economic impact of COVID-19. The highest average rental decrease in the apartment sector was in Al Ghadeer, where average rents decreased by 4.2 percent from Q1 2020, with average two-bedroom apartment rents standing at AED 40,000 per annum. Al Reem Island witnessed the second-highest quarterly declines, at -4 percent, due to declining rents for smaller units. Studio rents averaged AED 46,000 while rental rates for a one-bedroom units stood at AED 60,000 per annum.