Abu Dhabi residential market 'shows growth'
Abu Dhabi, February 7, 2013
The Abu Dhabi residential market is showing signs of growth with some areas defying the overall trend of declining rent prices and performing at an encouraging level, says a report.
The areas that have benefited from the recent development of good quality residential communities, such as Raha Beach, Raha Gardens, Al Reem Island, Saadiyat and Al Reef, have all demonstrated rental price increases over the last six months which appear set to continue throughout 2013, said the report from Cluttons, a real estate specialist.
The increases are linked to general market demand. This is being driven by an influx of people moving to Abu Dhabi from both Dubai and outside the region, as well as relocating within the city from older buildings, which lack equivalent facilities to the modern developments. The general standard of living and quality of build has improved in Abu Dhabi, which has also encouraged movement within the marketplace, the report said.
The recent decree that all government employees, as well as those who work for government-affiliated companies, must live within Abu Dhabi has helped fuel residential property demand. The Dubai to Abu Dhabi migration is expected to continue throughout 2013 as existing leases in Dubai expire. Indications are that tenants working across various sectors including the airline, construction, energy and professional services industries are moving to Abu Dhabi, said Cluttons.
Average rents in Abu Dhabi have also become more affordable whilst Dubai rents have begun to rise, bringing the most sought-after areas of both cities closer together. For example, the average rent of a two bed apartment in Dubai Marina is Dh125,000 per annum, while the average two bed apartment rent in Al Reem, Raha Beach and Saadiyat range from Dh105,000 – 145,000, dependent on quality. This has helped to encourage people to relocate to the capital, it said.
Recent announcements on future developments, investment into infrastructure and real estate, and the Sorouh/Aldar merger have also helped bring confidence to the marketplace. There are many positive signs that, as long as Abu Dhabi continues to offer enough jobs and improved lifestyle, people will continue moving to the city, said the report.
Average rent increases of two beds within the following areas over the last six months:
• Al Reem – 10 per cent increase on two bed apartments. Current average rent Dh105,000 per annum
• Raha Beach – 22 per cent increase on two bed apartments. Current average rent Dh135,000 per annum
• Al Reef – 17 per cent increase on two bed villas. Current average rent Dh95,000 per annum
• Raha Gardens – 18 per cent increase on two bed villas. Current average rent Dh160,000 per annum
• Saadiyat – 25 per cent increase on two bed apartments. Current average rent Dh145,000 per annum
Whilst further stock is expected to be brought to the market throughout 2013, Cluttons believes that high quality developments with good facilities will continue to be in high demand and experience rental increases.
The average two bed rent in older buildings on the island is currently Dh95,000 per annum, a 10 per cent decrease over the past 12 months. The increased supply of new apartments is expected to put downward pressure on rents across the island as people choose to relocate to newer buildings.
Landlords in older buildings will be forced to further lower rents as vacancy increases, in order to secure a return on their investment. The redevelopment of older buildings will also be crucial to protect rents and reduce vacancy levels, if they are to compete with new stock entering the marketplace, the report said. -TradeArabia News Service