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Mat Green, Head of Research & Consultancy UAE, CBRE Middle East, said, “Whilst we have seen a slight increase in office rentals, Abu Dhabi’s commercial sector has stagnated with limited new demand emerging amidst a period of low oil pricing and uncertain economic conditions both regionally and globally.”
According to the report, this is the first quarterly increase that has been recorded since Q1 2014. Average prime office rentals are recorded at AED1,900/m2 and typically range between AED 1,600 – 2,200/m2 for CAT A and AED 1,350 – 2,100/m2 for Shell & Core accommodation.
“Despite the limited availability of Grade A office accommodation, average prime rentals are expected to remain broadly stable in the coming quarters, as weak occupier demand limits short term growth potential. However, as premium office towers start to near full occupation we can expect to see rentals rise further,” further commented Green.
According to the CBRE report, during the first quarter residential rentals increased by around two per cent, marginally down on fourth quarter performance when rates increased by three per cent. Over the past year, average rental growth has been relatively consistent, ranging between two per cent and three per cent for each of the past four quarters. This preceded an initial spike in rentals during the latter stage of Q4 2013 immediately after the removal of the rent cap.
“Whilst the timing is still to be confirmed, it is widely expected that a new rental matrix will be introduced in Abu Dhabi to replace the old rental cap system. Following a 12 per cent increase in residential rentals during the past year, many residents in the capital are becoming increasingly concerned over the escalating cost of living, particularly as utility rates are also on the rise,” added Green.
According to the report, overall residential leasing demand has remained strong during the quarter, with the highest demand recorded for two bedroom units. Rentals within this size bracket average AED141,000/unit/annum. For prime developments, the range is significantly higher at around AED150, 000-205,000/unit/annum.
3-Bedroom apartment units currently averaged around AED168,500/unit/annum, rising over 10 per cent from the same period last year. For prime developments, three bedroom units range between AED240,000-285,000/unit/annum. Similar to two bedroom units, the highest three bedroom rental rates are also found within the St. Regis Residence.
Aldar has announced the completion of sales for 281 land plots in Al Merief, a residential community dedicated for UAE nationals. The successful absorption of these land parcels underlines the current strong demand from both end users and developers.
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