Rents in Abu Dhabi are being kept at artificially high levels as landlords who made "vast amounts" during the boom years fail to accept a shift in the balance of supply and demand.
A split is forming in the capital between long-time landlords that have reaped the benefits of high rental prices of the last few years, and refuse to lower their prices, and owners who have taken over properties at new developments where prices are falling "dramatically", UAE daily the National reported on Friday.
“The newer landlords who have just taken over control of properties are much more prepared to negotiate on prices than established landlords who have reaped the rewards of the past few years," Mark Orman, a property lawyer at Trower and Hamlins, was quoted as saying.
“Prices on the off-island developments are dropping dramatically, week by week."
Outside of new developments, prices remain stubbornly high. Landlords here are struggling to come to terms with the new financial climate, Paul Maisfield, the head of professional services division at Asteco, told the National.
Jessie Downs, the head of research at Landmark Advisory, a division on the Dubai-based property brokerage firm Landmark Properties, believes the problem is that the capital’s landlords are a “homogeneous group”. As a result, prices move in an apparently coordinated way, making them less responsive to market forces than in Dubai.
In Dubai, Landmark said last week rents were still falling, although sales had started to stabilise. Rental rates in Dubai have already tumbled by up to 41 per cent since January.
As a result of the price differential, Abu Dhabi residents are increasingly commuting from Dubai.
Loshini Lawrence, operations manager at Better Homes in Abu Dhabi, told the National: “Abu Dhabi prices are still a bit inflated. Many people prefer to live in Dubai, enjoy the savings and lifestyle, and do the commute to Abu Dhabi themselves or get a driver.”