Rents of residential apartments in “off-island” locations of Abu Dhabi are nearly 44 per cent cheaper than ‘on-island’ locations, according to CBRE.
“The rental gap between properties located “off-island” and those in “on-island” locations in Abu Dhabi remains firmly intact, with apartments in off-island locations 44% cheaper than those on the main island,” the real estate consultancy said in its Q4 market review.
Average annual rents for two-bedroom apartments “off-island” stood at Dh66,500 per annum compared to Dh115,000 per annum “on island”.
Off-island locations include areas such as Mussafah, Mohamed Bin Zayed City and Khalifa City.
CBRE believes though rents will continue to rise, but new supply will put a cap on inflationary pressures in certain areas.
“Rental growth appears to be a new reality for the majority of residential tenants, the high volume of expected new supply may at least help to curb some of these inflationary pressures,” the report said.
CBRE expects nearly 40,000 new residential units to be delivered over a period of three years, i.e. 13,333 new units every year.
Reem Island will have close to 45 per cent of these new completions.
The residential sector returned to positive growth during 2013, but in highly fragmented way.
“The recovery is expected to gather further momentum over the next 12 months, as the impact of the recent rent cap removal is felt in earnest,” the report said.
Rents increased by an average of 16 per cent, with the strongest growth recorded during the final quarter when rates rose by as much as nine per cent. Rental increases were highest for one-bedroom units, which jumped 11 per cent during the fourth quarter, CBRE said.