Abu Dhabi — Housing rents grew marginally in the capital on slow deliveries of new residential units, says real estate advisory firm MPM Properties. The demand and supply dynamics had an impact on rents that grew four per cent in the first quarter of the year, says MPM Properties, a subsidiary of Abu Dhabi Islamic Bank (ADIB).
A scale model of Al Maqta Canal Walk is showcased at the three-day property event.
In a report on Abu Dhabi’s property market, the firm said rents went up seven per cent year-on-year as only 750 new homes were delivered to the market, with another 5,800 expected to be completed in the remainder of this year.
At 2.9 per cent of total housing stock, this represents the lowest level of new residential supply in five years, when average annual growth has been around five per cent.
Last week, Abu Dhabi’s Hydra Properties announced the completion of phase one of its City of Lights project on Reem Island, which means 907 luxury apartments will be ready to be delivered to owners in the coming months.
Asteco said demand for high-end developments in Investment Areas including Saadiyat Island and Al Raha Beach remained positive, with Reem Island marked out as a strong performer in terms of sales transactions.
This demand trend was reflected in rents where units located in prime areas maintained an occupancy rate of 100 per cent, with a number of popular projects registering a three per cent increase in rental rates.
However, home sales prices dropped four per cent quarter-on-quarter, and are down 10 per cent to 13 per cent from their peak in the third quarter of 2014, largely due to weakening investor sentiment in the region related to a sharp drop in oil prices.
“What we are witnessing at the moment is that the lower oil price has temporarily dampened sentiment, but the market fundamentals remain strong,” says Paul Maisfield, CEO of MPM Properties.
“Rents have risen because of lower supply, and pent-up demand for high quality housing stock in the city means that sales are still healthy. A positive sign was Aldar’s ability to sell 281 villa plots at the Al Merief community in March. In addition, gross residential yields are now at six to seven per cent.”
Jerry Oates, general manager, Asteco Abu Dhabi, saw limited movement in villa sales transactions due to a shortage of available stock and the divide in price expectations between purchaser and vendor.
“However, with a number of new project announcements expected this year, both from large master developers and sub-developers, this could prompt renewed market movement,” he added.
Aldar reports that its 283 villa land plots, which were targeted at UAE nationals, as part of its Al Merief project in Khalifa City, are sold out, and the upscale Hidd Al Saadiyat development, from the Saadiyat Development and Investment Company (SDIC), reached a major construction milestone at the beginning of the year.
The development registered robust demand for its phase 1 release of 488 villas, which are scheduled from end of 2016 onwards.
The largest increases in apartment sales prices in Q1 were found in Al Bandar, which saw three per cent increase, whereas Al Muneera, Al Zeina and Saadiyat Beach Residence all saw two per cent increase.
Marina Square, Reef Downtown, Sun & Sky Towers and The Gate witnessed the same price increase. Villa sales prices in Raha Garden, Golf Gardens, Al Reef Villas, Saadiyat Beach Villas and Hydra Village saw no increase on Q4 2014 levels.
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