It was the second most expensive place in the world to rent according to the CBRE - now job cuts are driving rents and property prices down.
Some upmarket Abu Dhabi landlords are starting to offer tenants small rent reductions as the low price of oil prompts the capital's housing market to soften.
Overall average housing rents in Abu Dhabi fell by 1 per cent during the three months to the end of December 2015, the real estate services broker CBRE reported, as landlords reduced rents for some larger and higher-end apartment types.
However, rents ended 2015 about 4 per cent higher than they started the year, the company said, particularly driven by rent rises for smaller, more affordable homes.
It said that tenants looking for cheaper accommodation were renting homes in off-island locations such as Khalifa City, where annual rents for one-bedroom apartments are between AED40,000 and AED55,000. In the city centre, they rent for between AED60,000 and AED110,000.
Abu Dhabi scrapped its rent cap, pinning rent rises for existing tenants to just 5 per cent, in 2013. The move, which came at a time of an economic boom, helped fuel inflation in 2014 and led to the brokerage ranking Abu Dhabi as the second most expensive place to rent in the world last year.
But the oil price slump has prompted the Government to put some planned infrastructure projects on hold, causing a series of job cuts in the capital's highly paid oil and gas, infrastructure, construction and services sectors.
The UAE rail operator Etihad Rail last month announced a "restructuring initiative" thought to have included cutting almost a third of its workforce as the Government comes under pressure to rein in spending.
Last week, the British engi?neering company Atkins became the latest construction-related group to cut jobs in the region because of worsening economic conditions. The western law firms Simmons & Simmons, Latham & Watkins, Baker Botts and Herbert Smith Freehills have also recently closed their offices in the capital.
CBRE's figures confirm reports of a general slowdown in Abu Dhabi rents last year. Last week, the property data company Reidin reported that, according to its figures, rents in the capital fell by an average of 3.8 per cent last year.
Residential rents will fall in Dubai in 2016 and 2017 if "all housing units are delivered on time," according to Asteco, real estate consultancy. A total of 13,500 apartments and 800 villas were delivered in 2015 while a further 22,000 apartments and 7,700 villas are scheduled to be delivered this year.
The consultancy said that the drop in rates will be beneficial to tenants who will be able to negotiate better terms upon contract renewal.
Last month, JLL, a real estate consultancy, said that the UAE was unlikely to see oversupply of housing units and commercial space in 2016, with residential rentals softening in the short term.
Dubai developers are expecting delivery of 26,000 units this year, while the figure stands at 10,000 units in Abu Dhabi, JLL said.
|Media outlet||The Big 5 Hub|
|Country||United Arab Emirates|
|Cover Page||M C|