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The positive sentiment witnessed in Abu Dhabi since thebeginning of the year is driving sales prices up. With the lackof units available for sale in quality developments in Al RahaBeach for example, prices have risen by 19% to 26% compared to theprevious year, with some of the smaller units in Al Bandartrading at as high as AED 1,520 per square foot.
Similarly, Marina Square and Sun & Sky Towers on Reem Islandhave witnessed good levels of growth, up by 14% and 18%respectively, but they are still 43% and 50% below their respective price spikes in 2008.
Nonetheless, Asteco expects that with the handover ofThe Gate Towers by year end, the amount of competing supplyis likely to hamper growth in the short to medium term. Thismay be further amplified with the delivery of City of Lights byend of 2014, although delays are likely.
In continuation of last year’s trend, Reef Villas are still the mostpopular development, attracting not only Abu Dhabi residentsbut also return commuters from Dubai, with a five bedroomvilla now achieving up to AED 2.6 million compared to AED 2.1million last year, which is still 29% lower than its 2008 peak. Sales prices for villas in Golf Gardens and Al Raha Gardens rose 9% and 13% year-on-year but are still 28% and 26% respectively below 2008 levels.
“While prices are moving upwards very quickly, investors should be confident that there is no bubble scenario imminent. If we compare Q3 2013 prices for these developments to the 2008 boom, it’s an altogether different picture,” said Jeremy Oates, General Manager, Abu Dhabi, Asteco Property Management.
“Besides Sun & Sky Towers and Marina Square, Al Muneera and Al Zeinaare 31% and 33% respectively below their 2008 highs; so there is still a long way to go for the market in terms of appreciation,” he added.
The leasing market has witnessed similar trends with rentsincreasing by over 20% in many areas compared to the previous year, including high and midend properties. This is mainly due to government employeesreturning to the city, following the implementation of the 12September 2012 decree governing their emirate of residence.
Dubai commuters are predominantly attracted to the newproperties within the city in locations such as Raha Beach, AlReef and Reem Island, with little interest in the older Main Island real estate. With the exception of Al Reef villa rentals which grew by 14% year-on-year, Golf Gardens, Al Raha Beach and Al Raha gardens saw modest 3% to 8% annual increases.
“Prime properties such as Nation Tower and St Regis Residences have seen little growth, given the limited availability in themarket. However, if any of the desirable units were to becomevacant, we believe that potential tenants would be willing to pay a significant premium on current rates,” said Oates.
Rental prices for high end apartments on Abu Dhabi Island and the new Investments Areas such as Marina Square and Khalidya/Al Bateenclimbed on average by 20% to 29% respectively, while flats in central Abu Dhabi and the Corniche are now leasing for 43% and 42% below their 2008 levels.
Asteco is located in hall 3, stand number 3D20, at Cityscape Global.
For more details, please visit www.asteco.com
A copy of the full Asteco Abu Dhabi Q3 2013 report can be downloaded from – http://www.asteco.com/uae/dubai/research-library-listing
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