Dubai: There is a flight to quality in Abu Dhabi’s real estate market. Upscale properties — residential, commercial or retail — are assured of consistent demand and value gains, according to the latest quarterly update from Jones Lang LaSalle, the consultancy. The flip side, however, is that the market is seeing clear tiers getting formed.
“Recovery remains selective in terms of quality of location, design and management — leading to product differentiation and two-tier performance between high- and low-grade property,” said David Dudley, regional director and head of the Abu Dhabi office at JLLS.
No where is this more apparent than in the residential space; “residential recovery” remains confined to the premium locations, while, worryingly, “secondary sub-sectors continue to decline”.
The consultancy reckons that 2,700 residences were released into the Abu Dhabi market during the third quarter from completed buildings at Rawdhat and Danet on Airport Road, the Mangrove Place on Reem Island, Khor Al Raha apartments by Adnic at Al Raha Beach, Al Reef Downtown in Al Reef and additional units within Aldar’s Al Falah scheme.
During the three months to September, property sale values were up 5 per cent, a repeat of what transpired in the second quarter. The gains were highest in the first, at 8 per cent.
Rents for prime residential properties were on average unchanged at Dh130,000 for a two-bedroom apartment, while secondary residential rents took another drop, the report finds.
On the new development side, “There is more to expect from developers in Abu Dhabi; we have just received invites from a leading developer for potential investment options in Al Ain,” said Samir Munshi, managing director of Orion Holdings. “Currently, all of the investor interest into UAE’s property market has been dominated by Dubai.
“But there is a chance that some fund outflow will happen as foreign investors develop an interest in Abu Dhabi realty. When that happens, the new development pipeline - in the premium space - needs to be robust.”
As for the current year and early next, JLLS expects another 4,000 units to be handed over, including the Landmark Tower on Corniche, the Gate Towers on Reem Island and Al Reef Downtown in Al Reef.
“Although a large proportion of the residential pipeline announced prior to 2008 has since been delayed, the aggregate supply could still reach 254,000 units by the end of 2015,” according to the report. “The majority of this additional supply is located within masterplanned areas such as Reem Island, Saadiyat Island, Danet, Saraya and Rawdhat.”
