Abu Dhabi sees slight surge in rents

JLL says Abu Dhabi did not receive any major delivery during this quarter, keeping residential stock at approximately 244,000 units.

Housing rents in Abu Dhabi grew one per cent in the second quarter of the year, real estate advisory firm CBRE said in its latest report.
Since the second quarter of 2013, average residential rents in capital have seen sustained growth and during the quarter this trend continued with just over one per cent increase, according to the second quarter 2015 Abu Dhabi MarketView by global real estate consultancy firm CBRE.
It was, however, the lowest quarterly rise in two years. In annual terms, rental growth still looks substantial at around ten per cent growth, reflecting the relative strength of the market during 2014.
Last week, JLL, another real estate consultancy saw a flat growth in rents in the capital. The CBRE report found luxury apartment residences within master planned communities remain in strong demand amidst relatively limited new supply. This equated to a 14 per cent increase in rental levels during the past year alone. Within the mainland region, Al Reef Downtown has emerged as one of the preferred communities, reflected in the three per cent rental growth achieved, significantly higher than the one per cent increase in the wider market from the preceding quarter, the report revealed. During the second quarter, two bed room units in Al Reef Downtown were available from Dh85,000-105,000/annum whilst three bedroom units are typically in excess of Dh115,000/annum. Other similar types of residence within the mainland region are found to be priced substantially lower by 15-to 20 per cent. Mat Green, head of research and consultancy UAE, CBRE Middle East, said: "As has been the case historically, there appears to be a renewed focus on the development of high-end residences, particularly within the Investment Zone areas, with less focus on much needed affordable homes. This underlines a potential challenge for the wider market, with a continued mismatch between demographic trends and housing development."
"Whilst Abu Dhabi's real estate market witnessed relatively steady conditions during the quarter, the sector is still somewhat vulnerable to the current oil price situation, particularly its potential impact on major occupiers in the Government and Oil and Gas sectors, and other related industries.
"That said the market situation is softened by the relatively constrained development pipeline. Around 34,000 new residential units will be completed up to 2018, notably down on the five-year average and a similarly tight pipeline also exists for new Grade A office supply, with only a handful of good quality office properties are expected to be delivered in the short to medium term," Green concluded.
- haseeb@khaleejtimes.com

• Abu Dhabi