A glimpse of Abu Dhabi residential market

Abu Dhabi Residential MarketAmeen Al Qudsi, CEO, Nationwide Middle East Properties LLC

While the Dubai residential sector continues to witness an increase in rental and sales prices, a Jones Lang LaSalle (JLL) Q2 report reveals its growth rate is currently slowing down. It is a different story altogether in the capital. According to a similar JLL report, Abu Dhabi is forging ahead, reporting steady growth in the prime residential market. We spoke to Ameen Al Qudsi, CEO at Nationwide Middle East Properties, on the ramifications of the rent cap removal and the current trends in the capital’s resi-dential property market.

Rent cap removal’s effects on residential property market
The rent cap removal policy was put forth a year ago for the best interests of both tenants and landlords, i.e. to help them in resolving disputes easily. This policy brought a huge change and established fair rental values for tenants. We have seen an increase of 7 to 11% in rents since this policy was made effective. Prime one, two and three-bedroom units are averaging at Dh95,000, Dh130,000 and Dh185,000, respectively. Some areas in and around Abu Dhabi have been affected by the removal; however, there is no general increase across the whole market. A new property rental index is expected to be released later this year, dividing the city into 10 to 12 zones based on different rental values.

Areas witnessing an increase in values
The first two quarters’ analyses show that Al Reem Island, Al Reef, Al Raha Beach, Alghadeer, Al Raha Gardens and Golf Gardens have seen a significant increase in property values. Factors contributing to this increase vary based on the unit’s geographical location. The main general factors include proximity to essential aspects like schools, malls, healthcare facilities, gardens and hotels; units with sea views which are mostly preferred by investors; the marital status and interests of an individual; government-related initiatives resulting in job growth and, in turn, tenant growth; reduced rents enabling Abu Dhabi employees to live here rather than in Dubai.

Locations in demand by buyers and tenants
The locations currently in demand are the ones that have seen an increase in property values. The reason simply being an increase in costs creates more demand in a particular location and vice versa. Demand in a particular area can again depend on various factors (the general factors have already been mentioned earlier). These factors, however, are mostly favorable to expats. With the current trend, we have seen that locals tend to be more inclined towards the Saadiyat Beach Residences due to the villa sizes available, the atmosphere, budgeted real estate deals, amenities, investment op-portunities and others. 

Current activity in the residential market
The demand for renting or buying depends on various factors and the interests of the individual performing the transactions. Some buyers purchase property for investment purposes, while others buy for personal use. Our Q2 statistics has shown a good amount of increase in the rental and sales transactions for villas in Abu Dhabi compared to Q1. Further statistical analysis shows that two-bedroom villas are the most preferred for renting, while three-bedroom villas are the most preferred for buying. The demand statistics based on the type of unit shows that villas are the second most preferred property for both renting and buying, the first type being apartments. Q2 results show a trend of 19% and 26% of villas being rented and bought, respectively.

Type of property preferred by buyers
The type of residential property chosen by buyers varies according to their needs. We suggest that in-vestors buy studio and one-bedroom apartments if they are looking for steady and quick returns. If the buyer is planning to stay and use the unit for his own purpose, a good two or three-bedroom house with a maid’s room perfectly suits a family’s needs. A few buyers are completely interested in villas since a villa acts as an individual house with a large area, its service charges per annum are comparatively lower than apartments, and it provides a good return on investment.

Fast facts on AUH residential sector
• Around 1,750 units were completed in Reem Island, Danet Abu Dhabi and Al Reef during Q2, bringing the total stock to around 240,000 units.
• Sales prices for residential units increased for a sixth successive quarter, with a 7% increase in Q2 2014, bringing the average increase during the first half of 2014 to 17%.
• Rents also continued to increase for prime residential units, with the average rent for a two-bedroom apartment increasing by 3% during Q2 to Dh150,000.

Source: Jones Lang LaSalle Abu Dhabi Real Estate Market Overview Q2 2014

See the comparison here: Abu Dhabi maintains stable residential prices in Q2.


Source: Ellen Joyce Soriano, Special to Freehold
The writer is a freelancer


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