There is no respite for tenants in Abu Dhabi with a dubizzle, a UAE-based classifieds website, report for first quarter 2016 revealing rental increases of between 5 and 11 per cent in certain communities.
Rents for one- and two-bedroom apartments in Al Reef area rose by 9 per cent each, while three-bedroom apartments registered the largest increase of 11 per cent. Leases range between Dh135,000 to Dh150,000 per annum (pa), the report said.
In the Al Reem Island, rents jumped by 5 per cent for one-bedroom units, but sale prices fell 4 per cent, averaging Dh1,350 per square feet.
“This highlights it as a community to invest in, with the potential of increasing rental yields over time,” the report added.
Property prices in Al Ghadeer and Al Reef rose 3 per cent and 4 per cent, respectively.
“Despite witnessing an increase of four per cent in sale prices from first quarter 2015, Al Reef is still one of the most affordable communities in which to buy, with a sale price at Dh860 per square feet,” said Ann Boothello, Product Marketing Manager for Property at dubizzle.
While the first quarter 2016 report revealed an increase of prices in in-land communities, a drop in prices in more central areas has also been recorded. Prices in Abu Dhabi Corniche are down 10 per cent for one- and three- bedroom apartments compared to the first quarter 2015.
“As we see real estate becoming more affordable in central communities, the price increase in less central and established areas indicates that the capital is more family-oriented and people are seeking larger spaces for less,” Boothello added.
Pressure on prices
JLL, a global real estate consultancy, however, said prime rents have remained stable in the first quarter 2016 (averaging Dh163,000 pa for two-bed apartments within investment areas) due to relatively low vacancy in quality schemes.
Sales prices have also remained stable at 16,000 per square metre, but the reduction in transaction volumes may put further pressure on prices this year, it added.
“For the residential rental market, while demand growth has reduced, this is offset by a major reduction in annual supply completions leading to relatively limited vacancy in high quality schemes. Annual supply completions historically averaged 10,000 units per annum. However, current supply completions are at a fraction of that,” David Dudley, International Director and Head of Abu Dhabi Office at JLL MENA, said.
“During 2016, we expect residential rents to remain relatively stable in some sub-sectors, with a modest decline in others, but given relatively tight vacancy rates in quality schemes and limited supply completions, we are not expecting a dramatic fall in prime rents. In the event that the current pause in government spending remains for a while longer we could see more significant downward movement of rents,” he added.
A total of 719 units were delivered during the first quarter bringing the total residential stock to approximately 246,000 units. Deliveries include Amwaj 2 in Al Raha Beach, Al Falahi Tower in Danet Abu Dhabi and The Wave Tower on Reem Island.
Nearly 4,000 units are expected to enter the market by the end of 2016 mainly within Danet Abu Dhabi, Reem Island and Saadiyat Island, the consultancy said.