Abu Dhabi residential rental rates have dropped four per cent in the second quarter of this year despite a rise in tenant activity, according to a CBRE Marketview report.
The government’s recent decision stipulating Abu Dhabi employees to relocate back to the emirate has not helped hike rents, the report said.
Residential rents in the capital are now down by 10 per cent in the last 12 months despite increased leasing activity and record sales transactions in the first half of this year.
The highest demand currently is for two-bedroom units ranging from Dhs90,000 to Dhs145,000 per unit with a focus on high-end accommodation.
However inter-emirate relocation is not just the only reason for a rise in tenant activity in Abu Dhabi.
“The completion of a significant number of new residential units from master planned locations is also encouraging widespread relocation within the capital, as tenants look to capitalise on prevailing affordability as they search for new and better quality housing options,” said Mathew Green, head of research and consultancy UAE, CBRE Middle East.
According to CBRE, prime developments around Raha Beach and Saadiyat island remain in high demand as luxury housing finds favour among Abu Dhabi residents. The two-bedroom units at St. Regis range from Dhs168,000 to Dhs192,000 annually while rents at similar units in Etihad Tower in the main city start from Dhs135,000 per annum.
“Newly delivered residential developments such as Marasy Abu Dhabi and Nation Towers are commanding relative high rental rates, due to their superior quality finishes, waterfront views and wide ranging facility and amenity offers,” said Green.
“This trend reflects sustained demand for true high-end residential properties which offer tenants a real point of difference against existing inventory,” he added.
Abu Dhabi’s real estate market remains fragmented with sector performance varying by individual asset types and location, the report noted.
The emirate has been dealing with an over supply of residential units leading to a fall in rents. According to Statistics Centre-Abu Dhabi, the emirate added a total of 2,461 residential units in the first quarter of this year.
Despite the over supply in the capital’s real estate market, the residential sector is expected to revive by the end of this year owing to increased tenant and investor activity with demand continuing to rise for properties that offer additional facilities.
“As the recovery gathers pace, we expect to see rising growth specifically for good quality properties within established masterplan communities and desirable locations on the main island,” said Green.
“Off-island secondary residential locations and inferior products without access to good transportation services or the benefit of a masterplan are expected to see further deflationary trends in the short term before the recovery becomes more broad based,” he said.