Rents in the emirate are stabilizing after a particularly strong H1, where they increased by an average of 12%. Q3 2014 saw rents go up by only 2%, according to CBRE,
“On average, high-end rents for two bedroom apartments range between AED140,000-AED195,000/unit/annum on the main Abu Dhabi island. This translates into around a 45 – 65% premium when compared to similar types of unit situated off-island, whereby rents range between AED70,000-AED95,000/unit/annum.”
“However, price variation does become far wider when comparing luxury residences in prime locations. Prime developments on Saadiyat Island, Al Raha Beach and Corniche have average two bedroom apartment rentals of between AED160,000-AED200,000/unit/annum.”
Jones Lang LaSalle (JLL)’s new report says that all sectors of the Abu Dhabi market are positioned in the recovery stage of their cycle for the first time since 2008. The report highlighted the residential sector as the strongest-performing, saying it was driven by positive investor sentiment and population growth and potential future under-supply”.
JLL said that it expects undersupply in the future, as demand continues strong and new units arrive slowly. Around 1,200 units were added to the stock in Q3.
Limited supply has particularly benefited the villa market, said CBRE, especially on Abu Dhabi Island. Strong tenant loyalty, alongside limited lease options, has kept rent volatility low.
Looking at the UAE’s market as a whole, TASWEEK Real Estate Development and Marketing also released a report this week. ”There was a fluctuating yet sustained demand for real estate in Q3 as the size of the population expanded exponentially. This trend is only natural as the sector strives to meet the needs of the people. Other indicators include stronger banking liquidity, more services, and either sustained or increased prices for off-plan rentals and sales,” said Masood Al Awar, CEO of TASWEEK. “Further bolstering the industry’s expansion is the UAE Government’s move to put significant measures in place to prevent any speculative activity in real estate and to control credit growth,” he continued.
The UAE’s population is rising by around 7.6% per annum – one of the fastest rates in the world. Population is expected to hit 9.9 million by the end of the year, shooting up to 18.83 million by 2023.