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Abu Dhabi's housing shortage to stay
The UAE capital has 186,200 housing units, which is expected to rise to 193,100 next year and 213,100 by 2010, Colliers International said in its latest report.
- By Saifur Rahman, Business Editor
- Published: 00:33 May 15, 2008
Dubai: A planned supply of nearly 27,000 housing units till 2010 might not help meet Abu Dhabi's growing housing demand, which at 100,000 units is more than three times - a factor that is bound to push housing prices up, according to a latest report.
The UAE capital has 186,200 housing units, which is expected to rise to 193,100 next year and 213,100 by 2010, Colliers International said in its latest report.
Abu Dhabi will have to wait till 2013 by when expected delivery of additional 140,000 residential units could 'cool' the 'overheated' housing market, the report said. "Supply shortfall is most acute in middle-income segment while the highest demand is for one- and two-bedroom apartments," it said. "Asking rents for new leases are expected to continue rising, as market remains undersupplied. Rental year-on-year growth average of 22 per cent in 2007-08 is expected to slow with the imposition of the rent cap."
Collier statistics show that asking rent for mid-income segment averages at $370 per square metres per annum. At this rate, rent of a 100-square metre (or roughly 1,000 square feet) apartment could reach up to Dh135,790 - higher than that of upmarket Dubai. The asking rent for the high-income segments, according to Colliers, is $490 per square metre per annum. This translates to Dh179,830 for a 100-square metre flat per year. "Concern over heavy weighting towards high-end developments moving forward, uncertainty over role of newly-created Abu Dhabi Commercial Properties' plan to introduce additional supply remains," it says.
Majority of the announced projects in Abu Dhabi is in the luxury high-end market - like those in Dubai, leaving the mid-market under served.
"Abu Dhabi's urban planners have clearly watched Dubai's less controlled growth and, arguably an erosion of its local heritage to formulate their own expansion agenda - one that puts culture and community ahead of pure commercialisation," Jones Lang LaSalle said in its latest report on Abu Dhabi. "However, the city still lags Dubai and in a global context, real estate market transparency is below advanced markets."
The property market is currently characterised by shortages of quality space across all main sectors, it said. "Whilst the under-provision is helping to provide a short-term boost to rents and values of real estate owners, these shortages constrain the development of an efficient real estate sector and economy," it said.
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