Abu Dhabi sees 7pc rise in residential unit price
Abu Dhabi, July 22, 2014
Abu Dhabi’s real estate market has experienced growth in prime residential sector with the sales price of units increasing seven per cent during the second quarter of the year, according to a JLL report.
JLL’s Q2 2014 Abu Dhabi Real Estate Overview report pointed out that it has brought the average increase during the first half of the year to 17 per cent.
The recent removal of the rent cap in the emirate has had a major impact on rents of secondary buildings as landlords have taken the opportunity to increase previously below market rents more in line with current market levels, it said.
The office rents, however, remained unchanged in Q2 averaging Dh1,540 ($419) per sq m for prime and Dh1,180 per sq m for secondary space, it said.
There were no major new deliveries in the office market this quarter, with the total stock remaining stable at 3.1 million sq m. With an additional 130,000 sq m expected to enter the market during the year, there will be continued downward pressure on rents for secondary space.
The vacancy rate is currently at 30 per cent and is expected to increase as further deliveries take place in the next two years.
Meanwhile, the average line store retail rents for malls in Abu Dhabi and for malls outside Abu Dhabi remained stable this quarter at Dh3,000 per sq m per annum and Dh1,820 per sq m per annum respectively.
The retail deliveries in the Nation Towers Galleria on the Corniche and Al Marasy retail component in Al Bateen, resulted in an additional 20,000 sqm of retail gross leasable area (GLA) completing in Q2, bringing the total retail stock to approximately 2.2 million sq m GLA.
Over 400,000 sq m of retail GLA is expected to enter the market by the end of 2014, dominated by the delivery of Yas Mall on Yas Island.
Abu Dhabi’s hotel sector recorded a 77 per cent increase in occupancies. While ADRs remain under pressure, the hotel market has started to recover and is set to experience improved performance over the rest of the year, said the report.
The sector continues to witness new completions, with the opening of Ramada and Southern Sun hotels in the second quarter, it added.
The report provided the consultancy’s perspective on the latest trends in the office, residential, retail and hotel sectors in the Abu Dhabi market.
Craig Plumb, head of research at JLL Mena, said: “The second quarter of 2014 continued to witness growth in the Abu Dhabi’s prime residential market and little change in the office, retail and hospitality sectors. The Abu Dhabi market continues to be dominated by government related investment with short-term demand being fuelled by investment and job growth from new major government backed construction projects, such as the Airport expansion, Etihad Rail, Saadiyat Island museums and other major infrastructure, economic and social development initiatives.
“A sustainable recovery requires the government to continue to implement supply controls as many developers are now reviewing schemes that had been placed on hold following the market downturn. While new supply is needed – particularly of quality residential product, supply controls are required to ensure the right product is prioritised in locations with existing infrastructure.” - TradeArabia News Service