The cost of renting apartments appears to have dropped more in Abu Dhabi than it has in Dubai, at least according to the data compiled by one property analyst.
Leasing rates at residential buildings in the UAE capital have registered a 4 per cent decline on average since the beginning of the year until the end of February, according to real estate portal Bayut.com, which has about 1,000 property listings. In comparison, rents in Dubai went up by an average of 4 per cent during the same period, though overall rates remain cheaper compared to last year.
Analysts say that the real estate market in Abu Dhabi is merely going through a period of correction, adding that it is unlikely that there will be further dramatic falls in the short term.
"We believe a correction of the [Abu Dhabi] market is undergoing to shed the excessive inflationary weight it put on last year," said Haider Ali Khan, CEO of Bayut.com
But whether or not rents in Abu Dhabi are generally falling faster compared to Dubai is something that many tenants could not quite agree on. Some residents claimed that only the rents in certain locations, like Mussafah, Khalifa City are cheaper, but most of the properties are still expensive.
"Our rent has even gone up by Dh10,000 when we renewed our lease last December," said one Abu Dhabi resident who has been living in the same three-bedroom flat for three years now in the capital's Tourist Club area.
Separate data provided by JLL in its year-end report for 2015, indicate that Abu Dhabi apartment rents registered a 4 per cent year-on-year increase, while those in Dubai posted a 3 per cent decline. JLL mainly tracks prime properties.
"Rental rates for two-bedroom apartments increased 4 per cent in the first quarter of the year before flattening out at Dh163,000," the company said in its report released in January.
But according to Bayut.com's research, studio apartments in Abu Dhabi dropped by 1 per cent from Dh66,599 in December to Dh66,000 last month. For one-bedroom units, leasing rates registered a 4 per cent decline, from Dh110,806 to Dh97,000.
Two-bedroom flats now cost around Dh134,000 to rent, down 5 per cent from Dh141,684 in December, while three-bedroom properties posted a 2 per cent decline, from Dh188,036 to Dh184,000.
On the other hand, rents for four-bedroom flats have fallen sharply, by 8 per cent, from Dh264,173 to Dh243,000.
“From what we have observed, there will only be slight corrections in the Abu Dhabi market [this year]. Abu Dhabi is a standout financial, industrial and logistics hub of the region and is gaining popularity as a wonderful tourist destination as well,” Khan said.
“The unit supply pipeline is not as generous as that in neighbouring Dubai and continuous influx of working population to the emirate as a result of a robust economy means there will remain pressure on rental values throughout the year.”
In Dubai, studio units went up by 2 per cent, from Dh60,000 in December to Dh61,000 in February. One-bedroom flats have not registered any changes, while two-bedroom units posted a 2 per cent increase, from Dh150,000 to Dh153,00 during the same period. Rents for three-bedroom properties inched up from Dh206,000 to Dh209,000.
Units with four bedrooms are the only ones that registered a decline, with rents dropping by 7 per cent from Dh338,000 to Dh313,000.
Overall rents in Dubai, however, remained cheaper compared a year ago, posting a 1 per cent decline between February 2015 and February 2016.
Khan said the rental figures should not be a cause for an alarm. "Rents in prime localities are still being considered steep by many households," he said. "Prime areas and central localities like Al Reem island, Al Raha Beach and Al Khalidiya will always have their unique demand, and values there may defy market norms."
JLL Middle East and North Africa (Mena) said that rents in prime residential properties in the capital are still about 30 per cent higher than they were three years ago.
“Prime residential rents [alone] increased by more than 30 per cent over the past three years, with the annual growth rate reducing each year as supply and demand have moved in to balance,” Dudley told Gulf News.
Dudley said the residential market in Abu Dhabi remains “relatively stable”, particularly for high-quality residential projects and lower priced housing.
“The decline in oil price has led to a contraction of the oil and gas sector and indirectly a contraction of the government sector and a significant reduction in government spending, affecting GDP (gross domestic product) and employment/ population growth in other sectors.”
“However while demand growth has reduced, so has supply - with residential completion rates at their lowest point for ten years - leading to relatively stable market conditions characterised by low vacancy rates in high quality stock.”