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Investors in Abu Dhabi’s real estate sector can expect sustained rental growth and relatively stable capital values this year on the back of a strong performance last year, according to a new report by real estate company Asteco.
In its Abu Dhabi Property Review: 2014 Highlights and 2015 Outlook report, Asteco noted that the Abu Dhabi market has strengthened over the past two years and is set to continue this year with sustained rental growth across all sectors.
Average sales rates for apartments and villas increased by 15 per cent and 16 per cent respectively last year with a strong performance in the first six months, and prices started to stabilise during the rest of the year. The volume of transactions also declined in the second half due to a shortage of quality stock in the secondary market. The high sales experienced for the newly launched projects in Ansam, Al Hadeel and Mamsha Al Saadiyat proved that demand for quality products exists.
“Popular master-planned developments for sale included Saadiyat Island and Al Raha Beach, while Reem Island proved to be an attractive area providing more mid-market units,” said Jerry Oates, General Manager of Asteco Abu Dhabi.
“We expect apartment sales prices to remain stable this year as the market becomes more competitive due to the imminent handover of new projects.”
Full year-on-year comparisons since 2008 highlight continuous apartment sales price growth since 2012, up on average by 48 per cent for all areas combined but still 26 per cent lower than the 2008 market peak.
Sales prices in Al Muneera at Al Raha Beach now stand at Dh1,425 per square foot on average, up by 21 per cent compared to last year, whereas rates at Reef Downtown also climbed by 21 per cent to an average of Dh1,000 per square foot. Marina Square saw a 17 per cent increase to an average of Dh1,375 per square foot.
Villa sales prices also witnessed strong growth from their lowest level in 2012, growing 47 per cent on average for Al Raha Beach, Golf Gardens and Al Reef Villas during the period, with increases of 19 per cent during the past year alone. Rates are, however, still 11 per cent lower than their peak in the fourth quarter of 2008.
According to the report, the villa sales market will remain relatively flat as there will be limited prime and high-end products available for sale in the primary and secondary markets this year.
Despite continuous increases of 20 per cent since their low point in 2012, rental rates for both apartments and villas are still considerably more affordable than in 2008 by more than 40 per cent, indicating potential for further growth.
Apartment rental rates were up by 10 per cent year-on-year, while villa rentals rose by 9 per cent. The latter is expected to increase this year due to a shortage in quality units, with occupancy rates expected to be high.
Source: Property Weekly