Abu Dhabi?s real estate market has witnessed continued moderate declines, across sales prices and rents, during the Q2 2020, according to the Chestertons? Observer: Abu Dhabi Market Report Q2 2020
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.
Overall, the capital?s real estate market continued to see declines in sales values, with average apartment prices falling by 1.4 per cent and villas by 1.3 per cent 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 two per cent 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.?
Al Reef saw the highest price declines on an annual basis, at -7.8 per cent, followed by Al Ghadeer at -6.7 per cent. In the villa market, Al Raha Gardens recorded the highest declines q-o-q, with average prices falling by 2.2 per cent in Q2.
Average apartment rental rates fell by 2.2 per cent and villas by two per cent, 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 per cent from Q1 2020.
?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.?
?With Abu Dhabi?s economy forecast to rebound next year, we expect to see greater stability across residential prices and rents over 2021,? concluded Hobden.
