Rents for prime building up 6% in Abu Dhabi

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Rents for prime building up 6% in Abu Dhabi
Asteco is predicting an increase in rental rates over the next few months in the absence of any major handover of new villa stock before 2017.

Published: Mon 13 Jul 2015, 12:00 AM

Last updated: Tue 14 Jul 2015, 10:19 AM

The rents for prime buildings have gone up by 4-6 per cent in the second quarter of the year, says Asteco.
In its January-June 2015 Abu Dhabi report, the full service real estate company reported a six per cent rise in the last quarter; with the first six months of 2015 recording positive overall market dynamics for the sector.
The majority of prime, high and mid-quality developments increased by 4-6 per cent upon contract renewal; whereas new leases were, on average, eight per cent higher than in the first quarter 2015.
Masood Al Awar, chief executive officer of Tasweek, a property firm in the capital, said the rise in rents is a result of the strong demand for quality housing created by economic diversification taking place here. The other factor is the absence of rent cap.
According to property services firm Asteco, "some of Abu Dhabi's most popular prime 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 prospective tenant waiting lists, indicating the continued lack of prime quality supply in the Capital."However, prime apartment buildings located on the Corniche recorded little or no increase in the second quarter, with rental rates already at a premium.
"This turnaround of events is attributable to the gradual stabilisation of sales prices over the last six months, allowing for strengthened yields and positive long term prospects for landlords," said Jerry Oates, general manager, Asteco Abu Dhabi.
Sales prices for apartments and villas remained steady, continuing the trend of the last 12 months, although year-on-year figures showed average positive growth of four per cent in apartment sales prices.
Rental demand for quality villa stock in high-end developments also augurs well for potential investors with continued optimum occupancy rates for what stock there is available, with Asteco predicting an increase in rental rates over the next few months in the absence of any major handover of new villa stock before 2017.
A number of high profile launches did however take place during Q2, predominantly located on Reem, Yas and Saadiyat Islands, including Aldar's West Yas and Mayan on Yas Island; with Reem welcoming New Horizon, by Tamouh; Meera from Aldar; and Aabar's The Kite.
Saadiyat Island also saw some new launches such as Bloom Properties' Park Views, which achieved sales rates between Dh1,750-1,850 per square foot.
"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. This is also a strong indication that developers are optimistic about market prospects, and both buyers and tenants will ultimately benefit from more choice," said Oates.
Demand for high-end villas has also been positive in Q2, with Asteco highlighting the successful launch of TDIC's Jawaher Al Saadiyat and Hidd Al Saadiyat developments, priced at Dh5.7 million to Dh25 million and from Dh7.5 million to Dh38 million, respectively. Emirati investors jumped to invest in the first phase of Aldar's master-planned Al Merief project in Khalifa City and Nareel Island located on the north-western corner of Abu Dhabi Island, with plot sales reserved for UAE nationals.

By Haseeb Haider

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