With new stocks of property coming onto the market in Abu Dhabi, the cost of renting an older home in the capital city of the United Arab Emirates is on the decline.
With wealthier investors seeking out the new-build stock, there is likely to be a greater divide between class and older stock.
In fact, while the new builds are popular enough and in large enough demand, they should be able to sustain a reasonable rental yield. With older stock, however, the rental yields will decrease, forcing existing landlords to spend additional funds to upgrade and market their properties just in order to stay competitive.
According to a report by Asteco Property Management, 15,000 homes were brought online in 2012 with an expected 17,000 new builds in 2013.
The majority of new builds are apartments and condos. There is an overall lack of villas in the city, making the rental income from the existing villas exclusively priced.
Government officials who reside in Abu Dhabi qualify for a housing allowance, which further drives the demand and for high-end new-build stock, and decreases the rental value for older stock.