Housing rents softened further in the first quarter, especially at the lower end of the Abu Dhabi quality scale, with little or no increase in some areas.
High-end properties in investment areas recorded modest increases of between 1-3 per cent, said the Asteco real estate report for the first quarter.
“Rental rates were driven by tenants relocating from Abu Dhabi 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, GM of Asteco Abu Dhabi.
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, added Oates.
Rental rates for prime two-bedroom apartments in Abu Dhabi now average at Dh200,000 per annum, whereas similarly 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 in Abu Dhabi are renting for an average of Dh80,000 per annum while the same size apartment in the investment area of Reef Downtown will cost Dh95,000 per annum on average.
In terms of villas, a three-bed property in Abu Dhabi now costs on average Dh190,000, compared with Al Raha Beach and Saadiyat Island, where the same sized villa will cost Dh260,000 and Dh300,000 per annum respectively. The changing patterns of supply and demand led to a mixed performance for specific pockets of the Abu Dhabi real estate market in the quarter ended March 31, according to the real estate report.
In general, average apartment sales prices increased by nine per cent, two per cent less than the previous quarter. Average villa sales climbed six per cent during the quarter three per cent higher than the previous quarter. 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. The Gate Towers at Shams Abu Dhabi have also benefited from increases following their recent handover, which saw prices increase by 19 per cent to Dh1,400 per square foot 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 square foot, representing a 21 per cent increase from the last quarter 2013. 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 last 12 months. On average a three-bedroom villa now costs around Dh1.95 million compared to Dh1.65 million a year ago.
