JLL report says Abu Dhabi rents soften…

Rents in Abu Dhabi are softening, according to a latest report by according to Jones Lang LaSalle, but are still way higher than Dubai rents in areas such as JLT, Dubai Marina, Discovery Gardens or even the Greens and Springs communities.

These areas in Dubai have many residents who work in Abu Dhabi, but live in Dubai, because of the high rents in the capital.

According to the report, increase in supply has resulted in average rents for prime two-bedroom apartments dropping by four per cent to Dh135,000  per year in the third quarter.

However, a two-bedroom apartment in the above Dubai areas – again a prime catchment area for those commuting to Abu Dhabi – will not be more than Dh85,000.

“Since the market peak in 2008, the average rent for two-bedroom apartments in Abu Dhabi has fallen in excess of 44 per cent. Significant future completions of good quality residential buildings will continue to push rents down through the fourth quarter and into 2012 and will narrow the price differential between Abu Dhabi and Dubai,” the report, released today, stated.

The average rent for two-bedroom apartments fell by over 44 per cent since 2008.
 
“The softening of rents is decreasing the rent premium that Abu Dhabi has maintained over Dubai in recent years, which may help draw commuters back to the capital, increasing demand for real estate across all sectors,” it added.

However, the rental decline has slowed for lower quality and older units.

Over the past year, increased supply and rising vacancies in new “good quality” buildings resulted in year-on-year rent declines of around 10 per cent for prime two-bedroom apartment units and more than 30 per cent for lower quality units.

JLL estimates approximately 2,800 additional residential units were delivered in Abu Dhabi district during the third quarter, bringing the total current residential stock to approximately 193,000 units.

Majority of those units are from phase one of Al Zeina on Raha Beach, Yas villas and the Capital Plaza residential towers. These completions

Handovers will increase significantly in the fourth quarter with up to 11,000 units scheduled for completion. Future supply is mainly consists of units at Marina Square, Etihad Towers, and Al Reef villas and apartments.

Despite a large proportion of the residential pipeline announced prior to 2008 has since been delayed or cancelled due to developers’ over-reliance on pre-sales, the aggregate supply could still reach 246,000 units by the end of 2013.

Apartments outnumber villas, which make up less than a third of the upcoming supply, the report said.

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