Abu Dhabi’s residential rents grew 17 per cent year-on-year in the fourth quarter of 2014, according to the latest report from property consultant CBRE.
The report, however, noted that the rate of increase has dropped, with rents rising just three per cent quarter-on-quarter in Q4 2014.
“The delivery of new supply in recent months has increased competition for tenancies, resulting in a more cautious approach by some landlords who have become more realistic with their rental requests,” said Mat Green, head of research & consultancy UAE, CBRE Middle East.
“As the cost of living has risen over the past 12 months, there has been a more noticeable increase in demand for low to middle income units and also for non-prime areas of the capital. This in turn has driven rental growth in more affordable locations as a flight to quality continues.”
Abu Dhabi’s rents shot up in 2013 after the government revoked a rental cap in the property market in 2012. Furthermore, a decree stipulating all government workers to relocate to Abu Dhabi further boosted demand in the rental market.
However, the overall rate of rental increase declined in 2014, a previous report showed.
An earlier report by property consultant JLL showed that house rents in Abu Dhabi grew 11 per cent in 2014, down from 17 per cent in 2013. The report said that rental growth is expected to further slow down this year mainly due to reduced job creation in the emirate.
Meanwhile, rising rents have also driven up demand from end-users to buy homes in the capital, CBRE said in its latest note.
Residential properties on the outskirts of the emirate have become popular, mainly due to their affordable rates, the report said.
Housing units in areas such as Khalifa City A & B, Mohammed bin Zayed City and Mussafah were found to be increasingly popular among price-conscious residents.
In addition, the growing number of new schools, healthcare facilities and community retail centres is also helping to attract more family residents into the suburbs, the CBRE report said.
But the rising demand for affordable housing has not lowered the demand for quality units, Green added.
“Prime master planned developments such as Al Raha Beach, Reem Island and Saadiyat remain the hot options for residents looking for quality housing units,” he said.
Abu Dhabi is also set to see its supply pipeline growing over the next few years, the report said.
“In total, around 35,000 new residential units are expected to be completed over the next three years with a large portion being from within master-planned communities. Additionally widespread relocations are expected as residents look to move away from inferior properties,” Green said.