Cluttons in the Middle East reports optimistic signs of growth in the Abu Dhabi residential market
- United Arab Emirates: Thursday, February 07 - 2013 at 12:09
- PRESS RELEASE
Cluttons, the real estate specialist which has enjoyed a dedicated Middle Eastern presence since 1976, has found that areas of Abu Dhabi are defying the overall trend of declining rent prices and performing at an encouraging level.
The increases are linked to general market demand. This is being driven by an influx of people moving to Abu Dhabi from both Dubai and outside the region, as well as relocating within the city from older buildings, which lack equivalent facilities to the modern developments. The general standard of living and quality of build has improved in Abu Dhabi, which has also encouraged movement within the marketplace.
The recent decree that all government employees, as well as those who work for government-affiliated companies, must live within Abu Dhabi has helped fuel residential property demand. The Dubai to Abu Dhabi migration is expected to continue throughout 2013 as existing leases in Dubai expire. Indications are that tenants working across various sectors including the airline, construction, energy and professional services industries are moving to Abu Dhabi.
Average rents in Abu Dhabi have also become more affordable whilst Dubai rents have begun to rise, bringing the most sought-after areas of both cities closer together. For example, the average rent of a two bed apartment in Dubai Marina is Dhs125,000 per annum, while the average two bed apartment rent in Al Reem, Raha Beach and Saadiyat range from Dhs105,000 - 145,000, dependent on quality. This has helped to encourage people to relocate to the capital.
Recent announcements on future developments, investment into infrastructure and real estate, and the Sorouh/Aldar merger have also helped bring confidence to the marketplace. There are many positive signs that, as long as Abu Dhabi continues to offer enough jobs and improved lifestyle, people will continue moving to the city.
Average rent increases of two beds within the following areas over the last six months:
Al Reem - 10% increase on two bed apartments. Current average rent Dhs105,000 per annum
Raha Beach - 22% increase on two bed apartments.
Current average rent Dhs135,000 per annum
Al Reef - 17% increase on two bed villas. Current average rent Dhs95,000 per annum
Raha Gardens - 18% increase on two bed villas. Current average rent Dhs160,000 per annum
Saadiyat - 25% increase on two bed apartments. Current average rent Dhs145,000 per annum
- Raha Beach and Raha Gardens: These areas have seen rent increases that are linked directly to the decree, accounting for 40% of the enquiries Cluttons receives for these locations. Low supply of stock within these locations has helped to drive up prices with developments proving to be popular with people moving to the city.
- Al Reem: This district has also benefited from the decree, accounting for 25-30% of enquiries for the location. The development is well located with easy access to the city. The buildings within Al Reem benefit from having good facilities and have attracted people previously living in older buildings on the island, accounting for approximately 30% of all enquiries.
- Saadiyat: Has also benefited from the decree. While rent increases are market-driven, they are also influenced by the phased delivery of new apartments, which has helped to maintain demand.
- Al Reef Villas: This has proved to be an attractive option for families and people looking for villas at a more affordable rate. The villas offer good value for money for people wanting more space.
Whilst further stock is expected to be brought to the market throughout 2013, Cluttons believes that high quality developments with good facilities will continue to be in high demand and experience rental increases.
The average two bed rent in older buildings on the island is currently Dhs95,000 per annum, a 10% decrease over the past 12 months. The increased supply of new apartments is expected to put downward pressure on rents across the island as people choose to relocate to newer buildings.
Landlords in older buildings will be forced to further lower rents as vacancy increases, in order to secure a return on their investment. The redevelopment of older buildings will also be crucial to protect rents and reduce vacancy levels, if they are to compete with new stock entering the marketplace.
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