Residential Rental Real Estate market in Abu Dhabi City dips a whopping Fifty per cent

Residential Rental Real Estate market in Abu Dhabi City dips almost Fifty per cent

The year 2016, first quarter has shown that annual increments in house rents within Abu Dhabi city have taken a beating by almost fifty per cent and there are a few reasons for the same.

It has been observed that many home owners and investors are renewing their lease contracts simply without a rent escalation or are just adding an extra five per cent to the cost pointing out to the fact that the rental markets are slowing down drastically.

It is important to note that there have been major rent increases in the years 2014 and 2015 which if combined together constitute almost fifty per cent of increase. This correction is probably a kind of compensation for the drastic increase very recently.

One of the reasons which probably every major developed or developing city in the globe faces currently is the factor of car parking space availability.

The impact of the rental increases in the last of couple of years has been that:

1. Many common people and the masses have started looking at locations around the main city like Mohammed bin Zayed City, Al Reef, Musaffah and Al Reem Island which are more affordable in nature.
2. Most of the new and previous tenants are now asking for fixed rents since the market has Corrected.
3. Many property owners have been renewing leases without any escalation or with minimum and nominal increases simply to keep the tenant out from going.
4. The first quarter of 2016 has seen Abu Dhabi real estate rentals increase by only five per cent after a substantial period of lull.
5. There have been instances where tenants have simply vacated homes even with slightly increased rents as there are multiple options easily available.

With real estate in the entire UAE region being under a lot of pressure currently, Abu Dhabi has been no exception and a lot of heat that was generated in the past couple of years in terms of price rise and rent increase seems tio have cooled down as the market looks for consolidation.