- Broker Directory
- My Tools
- News & Advice
- Market Trends
- Other GN Sites
Rental rates in Abu Dhabi are on the rise following a slow start to the year, with a six per cent rise in the last quarter compared to the first, according to the latest Asteco market report that was issued on Sunday.
The majority of prime, high and mid-quality developments saw price increases between four and six per cent upon contract renewal, while new leases were roughly eight per cent more expensive than in Q1 2015.
However, some developments such as the Eastern Mangroves, and St Regis Residences by TDIC, recorded rent renewal increases of 12 per cent and 10 per cent respectively, with long waiting lists.
The rise in prices is supported by a lack of supply of prime developments, analysts said.
Nikola Kosutic, research manager at research firm Euromonitor International, said that though demand is growing at a slower rate, the lack of supply is overshadowing it, pushing up prices.
“The biggest problem with the supply/demand equation is the lack of affordable housing. The majority of properties in the market this year and in the coming years [is] upscale, and demand for the mid-tier is high, but that is not seen as lucrative by developers,” he said.
Kosutic added that he expected the overall growth in the sector to be mild in the coming years.
“The market is now much more regulated, and there are more instruments in place preventing the creation of another bubble, so that’s why we don’t really see any steep growth in the future,” he said.
In terms of sales prices for apartments and villas, the Asteco report said they remained steady, although year-on-year figures showed average growth of four per cent in apartment sales prices.
A number of upscale launches also took place in Q2, predominantly located on Reem, Yas and Saadiyat Islands.
Jerry Oates, general manager of Asteco Abu Dhabi, said that the new launches will help increase the supply levels in order to meet demand.
“These launches will add in excess of 3,600 new apartment units to the market from 2018, in addition to the 1,800 units announced during 2014, bringing much needed new supply to Abu Dhabi’s market,” he said.
The recent issuance of a presidential decree aimed at regulating transparency in the local real estate sector is set to further boost market confidence and act as a catalyst for increased demand.
“[Factors such as oil prices] will impact residential prices, but they’ll come in a different way. I think what you’ll see is that the demand for employment will be one of the main drivers… so the oil prices won’t have a direct effect on prices but what it will have is an effect on employment,” Oates told Gulf News.
Whether employment rates go up or down, however, remains to be determined.
Source: Sarah Diaa, Staff Reporter, gulfnews.com