Abu Dhabi’s residential prices rose by five per cent in Q3 while rents remained largely unchanged due to sustained demand, according to a Jones Lang LaSalle report.
Residential property prices in the capital have been increasing throughout the year with an eight per cent and five per cent growth in Q1 and Q2 respectively.
However the report said that a growth in prices does not represent a market wide recovery since the current price growth is restricted to prime buildings in investment areas.
Abu Dhabi’s residential rents in prime locations continued to achieve increased premiums in Q3. But secondary units saw a continuous decrease in rental rates, as tenants preferred to move to the newer units in prime locations.
“The prime residential sales market has proven to be the best performing segment this year, with an increase in transaction volumes and quarter-on-quarter growth in sales prices for prime stock,” said David Dudley, regional director and head of Abu Dhabi office at JLL, Middle East & North Africa.
“We can observe that in three successive quarters this year, the market has continued to show signs of stabilisation and in some cases positive growth and recovery.”
Despite a robust supply of residential units to the market, the report pegged the reasons for sustained rental demand on the government’s mandate for Abu Dhabi employees to relocate to the capital. A rising difference in rents between Abu Dhabi and Dubai, with the latter’s rents increasing rapidly, was also seen to fuel demand in the emirate.
“The short to medium term market outlook remains positive, driven by major government-backed construction projects such as the airport expansion, Etihad Rail, Saadiyat museums and major new malls,” said Dudley.
However, Dudley said a long-term market recovery would also largely depend on the government’s success in diversifying its economy and generating employment growth.
“A sustainable recovery, is also dependent on the government continuing to implement further supply controls to ensure a balanced real estate market going forward, he added.
“The Abu Dhabi market looks positive in the medium term, but there will be selective strong performers specific to sectors, locations, user requirements, property management and overall infrastructure.”