Abu Dhabi: Abu Dhabi has become a more affordable place to live due to a drop in residential rents over the past 18 months caused by general oversupply and low demand, companies tracking the real estate sector in the UAE said yesterday.
“Older areas such as those located on Abu Dhabi island...continue to experience low demand and falling rents as people choose to upgrade to more modern developments. The fall in rents has helped to encourage people who commute to Abu Dhabi from Dubai for work to relocate to the capital, especially while rents increase in Dubai, said Cluttons in its 2013 first quarter market report for Abu Dhabi.
However, the report added that residential rents in areas benefitting from strong demand have increased by as much as 25 per cent during the last six months, defying general trends across the market.
“Since October 2012 there have been a number of large-scale announcements, demonstrating Abu Dhabi’s commitment to its economy and real estate sector. The merging of developer giants Aldar and Sorouh, and the announcement that Abu Dhabi’s Executive Council plans to add Dh330 billion into the economy and infrastructure over the next five years, have provoked a feeling of optimism in the real estate sector. In September 2012, the government announced that all its employees and those of government-affiliated companies must live in Abu Dhabi, which has helped to drive residential demand,” said Cluttons.
“Average rents for prime residential units increased by approximately 8 per cent from the fourth quarter of 2012 to the first quarter of 2013. This improvement does not represent a market-wide recovery, but relates to selected high quality developments. However, this is certainly positive for the market, indicating the first signs of market recovery,” David Dudley, Regional Director of Jones Lang LaSalle, a global property advisory firm told Gulf News.
In another report, real estate services firm, Asteco, said in the first quarter, the leasing market in Abu Dhabi remained strong with good levels of demand increasing upward pressure on average rental rates by as much as 8 per cent, particularly in the high-end segment driven by tenants seeking quality and those seeking the most affordable areas.
“The rental gap is narrowing between Abu Dhabi and Dubai, which combined with improved quality, means that Abu Dhabi now has a more competitive offering. Many newcomers to the UAE are also now preferring to live in the UAE capital rather than commute from Dubai,” said Paul Maisfield, Associate Director and General Manager, Asteco Property Management in Abu Dhabi.
Asteco said a two-bedroom apartment in Saadiyat Beach now commands an average rental rate of between Dh135,000 and Dh190,000 and rates for two-bedroom properties in the Al Raha Beach area grew to between Dh125,000 and Dh170,000. More affordable two-bedroom apartments in MBZ and Mussafah were renting on average for between Dh45,000 and Dh55,000 per annum.