Abu Dhabi property market sees mixed results in Q1

Abu Dhabi propertyImage Credit: Courtesy of Asteco

The changing patterns of supply and demand led to a mixed performance for specific pockets of the Abu Dhabi property market in the first quarter, according to the Asteco QJ 2014 real estate report. In general, average apartment sales prices increased by 9 per cent, two percentage points less than the previous quarter. Average villa sales climbed 6 per cent, three percentage points higher than the previous quarter.

Residential rental rates softened further in the first quarter, especially at the lower end of the quality scale, with little or no increase in some areas, while high-end property in investment areas recorded modest increases of between 1 and 3 per cent, according to the report.

High occupancy
"Rental rates were driven by tenants relocating from Abu Dhabi island to higher-quality and more modern buildings, typically within investment areas,"' said Jerry Oates, General Manager of Asteco Abu Dhabi. "However, prime properties situated on the Corniche and Khalidiya did continue to see high occupancy levels and retained strong premiums.

"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 next year, thereby leading to more stability in the supply-demand balance over the year."

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 and Dh1,550 per sq ft. The Gate Towers at Shams Abu Dhabi have also benefited from increases following its recent handover, as prices rose 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 Dh900 per sq ft, representing a 21 per cent increase from the fourth quarter.

Growth driver
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 past 12 months. On average, a three-bedroom villa now costs around Dh1.95 million compared to Dh1.65 million a year ago.

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 AI Raha Beach and Saadiyat Island currently lease for an average of Dh190,000.

At the lower end of the Abu Dhabi property market, two-bedroom apartments on the island capital are being rented out for an average of Dh80,000 per year, while apartments of the same size in the investment area of Reef Downtown cost Dh95,000 per year on average.

As for villas, a three-bedroom property on Abu Dhabi island now costs Dh190,000 on average. At Al Raha Beach and Saadiyat Island, same-sized villas cost between Dh260,000 and Dh300,000 per year respectively.

Abu Dhabi's office leasing rates continued to witness low levels of transactional activity in the first quarter.





Source: Property Weekly


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