No rise in Abu Dhabi rents

Residential rents in Abu Dhabi registered no increase in the second quarter 2013 despite employees of Abu Dhabi government companies having started to relocate to the capital, according to a new report.

Property owners were optimistic of witnessing a surge in demand and eventually increase in rental income when the decision to relocate was made in September 2012. However, Jones Lang LaSalle’s, a global property consultancy, report reveals that secondary locations have actually witnessed a rent decline as more supply entered the market.

“During Q2 prime residential rents remained unchanged after eight per cent growth during Q1, whereas secondary residential rents continued to fall. Demand growth driven by government spending and regulations to reduce commuting from Dubai has been partially offset by continued additions to supply,” the report said.

Asking rents remained at about Dh130,000 for prime two-bedroom apartments in the city due to growing demand and a relatively restricted supply of high quality properties.

Nearly 2,300 residential units were delivered in the second quarter, taking the total residential stock to 211,000 units.

In May, Emirates 24|7 reported that government owned companies were sending reminders to their staff, asking them to relocate to the capital before September or lose out on their housing allowance.

The Executive Council decision, issued last year, was aimed at ensuring the safety of employees commuting long distances, often in bad weather conditions. Government stats reveal the number of employees and their families who live outside the emirate at 23,000.

Sale prices rise

Average residential asking prices within investment areas, where expats are allowed to buy, rose by five per cent to Dh11,500 per sqm from Dh11,000 sqm in Q1 2013.

Average asking prices for apartments was at Dh13,500 per sqm, while average prices for villas stood at Dh10,000 per sqm.

These increases were, however, restricted to prime buildings within investment areas and do not represent a market-wide recovery, JLL said. The price growth was also accentuated by the limited stock available for purchase.

The growth in sales prices and transaction volumes over the past six months were mostly due to both Abu Dhabi and Dubai benefiting from the UAE’s status as a “safe haven” following political unrest in the wider region and job security returning due to government spending initiatives.

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