The property prices in Abu Dhabi, UAE, remained relatively stable in the first quarter of 2015 even as there was a significant demand for affordable residential units, said a report.

The real estate sector in the UAE capital saw a sedate start to the year with sales rates stabilising after a growth spurt in 2014, along with modest first quarter rental rate hike for specific projects in key locations, stated property expert Asteco in its Abu Dhabi Property Review Q1 2015 report.

The demand for high-end developments in the investment areas including Saadiyat Island and Al Raha Beach remained positive with Reem Island marked out as a strong performer in terms of sales transactions, it said.

This was reflected in the rental market where units located in prime projects maintained an occupancy rate of 100 per cent and overall stability in rates, with minor increases registered for certain developments with a number of popular projects registering a three per cent increase in rental rates.

“Prime and high-end residential units continue to dominate demand and command higher rental rates compared with other market locations, especially for one and two-bedroom apartments. We are also witnessing a significant increase in demand for affordable units this year,” remarked Jerry Oates, the general manager at Asteco Abu Dhabi.

“However, we continue to see limited movement in overall villa sales transactions partly due to a shortage of available quality stock and the continued divide in price expectations between purchaser and vendor. However, with a number of new project announcements expected this year, both from large master-developers and sub-developers, this could prompt renewed market movement,” he added.

Leading developer Aldar said its 283 villa land plots, which were targeted at UAE nationals, as part of its Al Merief project in Khalifa City, are sold out, and the upscale Hidd Al Saadiyat development, from the Saadiyat Development and Investment Company (SDIC), reached a major construction milestone at the beginning of the year.

The development registered robust demand for its phase 1 release of 488 villas, which are scheduled from end of 2016 onwards.

Asteco said the largest increases in apartment sales prices were found in Al Bandar, which saw a three per cent increase whereas Al Muneera, Al Zeina, Saadiyat Beach Residences all saw two per cent increases. Marina Square, Reef Downtown, Sun & Sky Towers and The Gate remained the same, stated the report.

According to Asteco, the villa sales prices in Raha Garden, Golf Gardens, Al Reef Villas, Saadiyat Beach Villas and Hydra Village saw no increase on the fourth quarter 2014 levels.

Comparing prime investment areas with lower-end Abu Dhabi island apartments, one and two-bedroom units in Shams Abu Dhabi are renting for up to Dh120,000 and Dh180,000 ($32663 and $48995) respectively versus Dh70,000 and Dh90,000 ($19,053 and $24,497) for apartments in Central Abu Dhabi.

Off-island the price drops even further with one and two-bedroom homes in Khalifa and MBZ City going for Dh55,000 and Dh80,000 ($14,970 and $21,775) per annum respectively.

A four-bedroom villa in Al Reef is currently renting for Dh155,000 ($42,190) per annum with a three-bedroom in Hydra Village leasing for around Dh95,000 ($25,858). By comparison a luxury three-bedroom property on Saadiyat Island would rent for up to Dh300,000 ($81,659) per annum.

Abu Dhabi’s office market registered positive rental rate growth of 6-8 per cent for Grade A space in the first quarter of 2015 due to limited supply, especially of fitted and efficient space in new buildings.

“This in turn led to an increase in enquiries for better quality Grade B office space, although rental rates have not responded with increases due to the high volume of vacant office space currently available,” remarked Oates.

Availability of office space for sale in Infinity Tower and Sky Tower on Reem Island will be further boosted this year with the addition of Addax Tower at City of Lights, he added.-TradeArabia News Service