Off-plan sales are driving the Abu Dhabi housing market, according to Chestertons Mena.
In the fourth quarter of 2017, off-plan sales activity remained high as developers rolled out a number of incentives to attract buyers. However, the secondary market witnessed a two per cent decline in apartment sales prices and one per cent decline in villa sales prices. GCC and Arab nationals dominated both markets.
Ivana Gazivoda Vucinic, head of consulting and research at Chestertons Mena, said: "Throughout 2017, we saw the effects of a number of economic factors, including low oil prices... increased stock in the secondary market, a rising cost of living and redundancies."
Sales prices, on average, decreased by two per cent for apartments during the quarter, with some markets experiencing a more pronounced decline, such as Reem Island (five per cent).
Conversely, Saadiyat Island registered the highest increase in apartment sales prices for the second consecutive quarter at five per cent, fuelled in part by the inauguration of the Louvre Abu Dhabi. On average, prices increased from Dh1,362 to Dh1,430 per sqft in Saadiyat Island, compared to Reem Island, which declined from Dh1,242 to Dh1,184 per sqft.
Average villa sales prices fell by one per cent in the fourth quarter, with the Al Raha Beach area falling more than four per cent from Dh1,348 to Dh1,282 per sqft. Khalifa City, in contrast, registered an increase of almost six per cent, with prices up from Dh852 to Dh895 per sqft. There was an overall decline in rents of two per cent and one per cent for apartments and villas, respectively.
There's some positive news for investors, as rents for one-bedroom apartments in Al Khalidiya rose by seven per cent, bucking the wider market trend.
In the villa market, Al Reef and Reem Island emerged as preferred locations. For example, a three-bedroom villa in Al Reef could be rented for Dh120,000 per annum and on preferential leasing terms. Saadiyat Island was the best performing area in the apartment segment and Khalifa City in the villa segment. Mohammed Bin Zayed City registered the highest increase in villa rents at almost two per cent.
Vucinic added: "There is a likelihood of positive economic sentiment emerging from Adnoc's recent announcement to invest $109 billion in growth strategies. This plan could be the turning point for Abu Dhabi's real estate sector as it could generate new jobs and therefore renewed demand for residential property."
The supply of new apartment and villa units peaked at around 1,500 and 250 respectively.