Average rental rates in Abu Dhabi for apartments and villas fell by 7% and 5% respectively during 2016 and are expected to soften further in 2017, according to the latest Abu Dhabi Real Estate Report Q4 2016 from real estate consultant, Asteco. The decline will be exacerbated by new supply to the market. Approximately 1,400 residential units were handed over during 2016, and around 4,000 units – including 2,700 apartments and 1,360 villas - are expected to be handed over this year, the report said. John Stevens, Managing Director, Asteco, has been quoted in a press release issued by the company: "Although delays cannot be ruled out, this will definitely put pressure on rental rates for existing stock." The continued macroeconomic uncertainty will also negatively affect rents as tenants search for more affordable rates. "Residential units that were previously able to maintain rental levels due to the reluctance of existing tenants to move, are now more likely to be affected as residents in search of the best value-for-money will become more frequent. High profile corporate mergers in the pipeline are expected to lead to increased job uncertainty and could affect employee benefit packages, including housing allowances over the next few years, raising the potential for softening demand and therefore declines in market rates," added Stevens. Rents of prime and high-end apartments also declined by 6% and 9% respectively year-on-year. The average annual rent of a high-end two-bedroom property on Abu Dhabi Island falling 10% to AED141,000 in 2016; and a two-bedroom apartment in Khalidya/Bateen dropping by as much as 13%, on average, to AED146,000. Mid and lower end apartments experienced a 5% drop, primarily during the second half of last year. The greatest decrease in villa rents, 10%, was witnessed in the Al Raha Beach area. "Mature villas, which previously recorded high rental rates, have been affected the most, which resulted in an increase in vacancies in some communities," said Stevens. Apartment sales prices, meanwhile, decreased by 4% on average in 2016, with properties in Marina Square and The Gate both experiencing average drops of AED125 per sq ft. Apartments in Raha Beach/Al Bandar and Reef Downtown both saw average price increases of AED50 per sq ft compared to 2015 figures, the report said.