Thursday 21 June 2018

Property glut softens growth rate in Abu Dhabi

Abu Dhabi, April 2, 2014

Additional property supply in 2014 softened residential rental rates further in the first quarter (Q1) of the year, with little or no increase in some areas, while high-end properties in investment areas recorded modest increases of between 1-3 per cent, a report said.

The changing patterns of supply and demand led to a mixed performance for specific pockets of the Abu Dhabi real estate market in Q1 2014, according to the Asteco Q1 2014 real estate report.

In general, average apartment sales prices increased by 9 per cent, 2 per cent less than the previous quarter. Average villa sales, climbed 6 per cent during Q1 2014, three per cent higher than the previous quarter.

“Rental rates were driven by tenants relocating from Abu Dhabi Island to higher quality and more modern buildings typically within investment areas. However, prime properties situated on the Corniche and Khalidiya did continue to see high occupancy levels and retained strong premiums,” said Jerry Oates, general manager, Asteco Abu Dhabi.

“Moving forward rental rates are likely to witness moderate growth during the course of the year, as although significant supply was initially forecast for handover, unanticipated delays could push deliveries to early 2015 thereby leading to more stability in supply / demand balance over the year” added Oates.

In terms of sales prices, there was robust demand for apartments at Al Raha Beach due to limited availability, with rates now between Dh1,000 ($272) and Dh1,550 per sq ft. The Gate Towers at Shams Abu Dhabi have also benefited from increases following their recent handover, which saw prices increase by 19 per cent to Dh1,400 per sq ft on average.

Low to mid-end developments, such as Reef Downtown, continued to record price increases above market averages, as buyers searched for more affordable options. Prices at Reef Downtown started from Dh 900 per square foot, representing a 21 per cent increase from the Q4 2013.

Villa sales price growth was predominantly driven by a lack of supply for freehold villa developments, especially within the affordable segment. For instance, sales prices for Al Reef Villas grew by 50 per cent over the last 12 months. On average a three-bedroom villa now costs around Dh 1.95 million compared to 1.65 million a year ago.

Elsewhere, 3BR type properties in Raha Gardens, Golf Gardens, and standard Saadiyat Beach Villas, were priced at Dh2.33 million, Dh2.85 million and Dh5.33 million respectively, according to the Asteco report.

Rental rates for prime two-bedroom apartments on Abu Dhabi Island now average at Dh200,000 per annum, whereas similarly sized properties in the investment areas of Al Raha Beach and Saadiyat Island, currently lease for an average of Dh190,000.

At the lower end of the market, two-bedroom apartments on Abu Dhabi Island are renting for an average of Dh 80,000 per annum while the same size apartment in the investment area of Reef Downtown will cost Dh95,000 per annum on average.

In terms of villas, a three-bed property on Abu Dhabi Island now costs on average Dh190,000, compared with Al Raha Beach and Saadiyat Island, where the same sized villa will cost Dh260,000 and Dh300,000 per annum respectively.

Abu Dhabi office leasing rates continued to witness low levels of transactional activity in Q1 2014. However, Grade A office space showed signs of recovery with moderate growth levels last quarter for both shell & core and fitted space.

Office leasing rates increased by 3 per cent and 4 per cent for fitted and shell & core offices, respectively, in recently completed buildings. Rental rates for completed older good quality buildings increased by 2 per cent, averaging up to Dh1,020 per sq m per annum.

Rental rates for Grade B office space showed signs of stabilising with no rate fluctuations. Asteco anticipates approximately 600,000 sq m of office stock will be delivered in 2014; however, the vast majority of this stock is owner-occupied and will not be available for lease. – TradeArabia News Service

Tags: abu dhabi | apartment | Rentals |

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