Abu Dhabi’s residential sales market recorded a growth rate of five per cent in Q2 2013 as volumes of sales transactions rose, while rents have remained stable, a Jones Lang LaSalle (JLL) property report reveals.
However the sales price rise is only restricted to prime buildings within key investment areas and does not represent a market wide recovery of the emirate that has been faced with an over supply of residential units.
The total residential stock in the UAE capital amounted to 211,000 units by the end of Q2 2013 after an addition of 2,300 units. The majority of these units were in AD One Tower, Eastern Mangroves promenade apartments on Salam Street, Saadiyat Beach villas and apartments on Saadiyat Island, Rosewood Residences on Al Maryah Island, Hydra Village (phase 1) on Abu Dhabi – Dubai highway and Al Wifak and Tala Towers on Reem Island.
An additional 10,000 units are expected to be delivered to the market this year, said JLL.
Both Abu Dhabi and Dubai are benefiting from the UAE’s reputation as a safe haven compared to the political unrest in the wider region thus sparking investor confidence in the region, the report inferred. Many Abu Dhabi residents have begun to own the properties instead of renting them.
The report also stated that the average rent for a prime two-bedroom apartment remained unchanged after an eight per cent growth in Q1 2013 while secondary residential rents have begun to fall.
It estimated that the persisting demand for the apartments is due to two reasons: increased government spending – leading to job creation and the new government ruling which requires Dubai-based employees to mandatorily relocate to Abu Dhabi.
However such measures have been offset by the timely supply of residential units.
“The rental differential between Abu Dhabi and Dubai is reducing, making Abu Dhabi more cost competitive. This has been combined with continual improvements to Abu Dhabi’s urban offering,” the report said.
Residential projects that provide proper amenities, facilities and support retail are quickly gaining popularity among Abu Dhabi renters causing a rise in demand for those developments.
The rising demand for high quality developments has resulted in a rental decline among the secondary apartments, said JLL. This trend is expected to continue for the rest of the year.
According to a data from the Statistics Centre – Abu Dhabi (SCAD), around 81 per cent of the buildings in the capital are residential towers compared with 26 industrial ones and 16 public facilities.
“The first half of 2013 has been encouraging for the recovery of Abu Dhabi’s real estate markets. Prime office and residential rents have stabilised,” said David Dudley, regional director and head of Abu Dhabi office at JLL.