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During Q3 2014, average rents in Abu Dhabi increased by just 2%, although the market was fragmented with some properties seeing rates unchanged, according to the latest Abu Dhabi MarketView by CBRE, the global property consulting firm. After a very strong H1 2014 whereby rentals grew by an average of 12%, residential rents in the capital have shown signs of stabilization.
Mat Green, Head of Research & Consultancy UAE, CBRE Middle East, said, “On average, high-end rents for two bedroom apartments range between AED140,000-AED195,000/unit/annum on the main Abu Dhabi island. This translates into around a 45 – 65% premium when compared to similar types of unit situated off-island, whereby rents range between AED70,000-AED95,000/unit/annum.”
“However, price variation does become far wider when comparing luxury residences in prime locations. Prime developments on Saadiyat Island, Al Raha Beach and Corniche have average two bedroom apartment rentals of between AED160,000-AED200,000/unit/annum.”
According to the CBRE report, in addition to the high quality residences, well-established locations, access to a wide range of services and amenities and the overall feel of luxury living, prompts tenants to pay an extra premium to be situated in upscale residential communities.
The villa market has remained strong amidst limited supply particularly on Abu Dhabi Island. The combined effects of limited available lease options and strong tenant loyalty has resulted in limited volatility of rental rates for this property type.
“During the quarter, annual rents for a typical four bedroom villas on Abu Dhabi Island started from AED190,000/unit/annum, with rates going as high as AED350,000/unit/annum for luxury villa units in prime locations. Similar residential types in off-island locations are currently being rented between AED140,000-AED180,000/unit/annum,” stated Green.
Abu Dhabi has seen strong demand for housing requirements emanating from major corporate clients. Bulk deals arising from the medical, educational, and hospitality sectors to house employees remains a key source of overall residential demand. During the quarter, Aldar were reported to have signed a deal with Cleveland Clinic Abu Dhabi to lease over 600 apartments for their staff accommodation, noted the report
According to the CBRE report, over the past six quarters there has been a revival in the capital’s residential sales market with average prices for key investment locations growing by close to 22%. During quarter three, sales values increased by around 3%, with rates now typically ranging between AED13,725–AED17,760/m2.
During the quarter, Abu Dhabi’s Tourism Development & Investment Company (TDIC) launched a new phase of residential sales in Saadiyat Island Cultural District. The 461 high-end residential units will ultimately be situated in the same district as some of the world’s most prominent cultural institutes such as the Louvre Abu Dhabi, Zayed National Museum and Guggenheim Abu Dhabi. The launching sale prices are understood to be around AED21,500/m2 which is considerably higher than the overall market average of around AED15,750/m2.
“Abu Dhabi also witnessed the launch of another luxury residential project, the penthouses in Gate Towers on Shams Abu Dhabi on Reem Island. Average price was observed at around AED17,200/m2 for penthouses ranging from 430-614 m2,” commented Green.
Prices for more affordable developments such as Hydra Village and Al Reef remained unchanged during the quarter at around AED7,500-AED12,375/m2. The limited number of affordable investment options in the market at this time has given these developments a competitive edge in recent times with healthy rental and price growth achieved over the past year.
“The creation of more integrated mixed-use developments and the continued expansion and improvement of infrastructure facilities reflects the Government’s vision to make Abu Dhabi a more attractive destination for international guests and resident workers alike. However, whilst there has been significant progress in developing residential elements, many masterplan developments are still lacking planned cultural, retail and community facilities, elements that will ultimately make these locations more livable and importantly attractive to investors,” added Green.
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