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Abu Dhabi: Average prices of apartments in Abu Dhabi gained 9 per cent during the first quarter of 2014, slowing 2 per cent from the previous quarter’s rise of 11 per cent, according to the Asteco 2014 real estate report for the first quarter.
Average villa sales climbed 6 per cent during the same period — a 3 per cent increase over the previous quarter.
Meanwhile, residential rates softened further in the first quarter, especially at the lower end of the Abu Dhabi Island quality scale, with little or no increase in some areas.
High-end properties in investment areas recorded modest increases of between one and three per cent, according to the report. “Rental rates were driven by tenants relocating from Abu Dhabi Island to higher quality and more modern buildings typically within investment areas. However, prime properties situated on the Corniche and Khalidiya did continue to see high occupancy levels, and retained strong premiums,” said Jerry Oates, general manager at Asteco Abu Dhabi.
Rent cap removal
Oates commented on the recent removal of the federal rent cap saying that its effect will take longer to kick in. “We’ve seen little to no increase in rents overall. What we’ve seen is certain buildings where things have happened, but statistically, they’re not huge yet. We’re expecting [rents] to gradually rise over this year…and it will be in areas where people have lived longer like Tourist Club,” he told Gulf News.
Discussing projections for 2014, Oates said, “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 2015, thereby leading to more stability in 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 square foot.
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 square foot, representing a 21 increase from the fourth quarter of 2013.
Growth in prices of villas was mainly driven by a lack of supply for freehold villa developments, especially within the affordable segment. Sales prices for Al Reef Villas, for instance, grew by 50 per cent over the last 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 apartment on Abu Dhabi Island now average Dh200,000 per year. Similar sized properties in the investment areas of Al Raha Beach and Saadiyat Island currently lease for an average of Dh190,000.
At the lower end of the market, two-bedroom apartments on Abu Dhabi Island are renting for an average of Dh80,000 per year.
Source: Sarah Diaa, Staff Reporter, gulfnews.com