Brakes on Abu Dhabi rent hikes: 22,000 new units
Abu Dhabi will see supply of 22,000 new units in 2014, nearly double the number released in 2013, according to a Jones Lang LaSalle report.
The majority of the new supply is likely to be delivered in Reem Island, Saadiyat Island, Danet and Rawdhat, the global consultancy said in its Q4 Abu Dhabi real estate market report.
It warned, however, many of these deliveries may face delays.
In 2013, 11,600 units were handed over, which took the total supply of residential units to 218,000.
Approximately 4,400 residential units were delivered in Abu Dhabi during Q4 with the majority of these units being within Oceanscape and Gate Tower 1 on Reem Island, Al Bustan Complex on Airport Road, the Landmark Tower on the Corniche and the Danet Building by Darwish Bin Ahmed & Sons in Danet Abu Dhabi.
Besides, a number of units are scheduled for handover within National Housing communities including Al Falah and Watani developments this year.
Despite the increase in supply, JLL believes that the removal of the rent cap could potentially cause an increase in rents in the short to medium term before rental levels normalise.
Average asking rents for prime two-bedroom apartments have increased eight per cent in Q4 to reach Dh140,000 per annum, with average prime rents registering an annual increase of 17 per cent during 2013.
Demand continues to remain strong due to a variety of factors including: Government spending initiatives leading to job growth; government incentives to increase demand such as the decision to limit housing allowances to those employees living in Abu Dhabi and narrowing rental differential between Abu Dhabi and Dubai.
Property prices jumped by up to 25 per cent in 2013, but the gains were limited to prime projects. In the final quarter, prices rose by six per cent.
Asking prices increased for both apartments and villas, to Dh15,200 per square metre and Dh11,000 per square metre, respectively. The increases in investment areas do not represent a market-wide recovery and price growth was not witnessed elsewhere, JLL said.
The consultancy added that prices are likely to rise further following the Expo 2020 announcement and continued improved sentiment across the country.
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