Elaine Jones, CEO, Asteco Property Management
The Abu Dhabi property market showed signs of stabilisation during the last quarter (Q3 2011) with apartment rental rates declining just 6%, compared with 8% and 9% in the preceding two quarters, according to Asteco’s quarterly Real Estate Monitor.
Villa rental rates for Q3 were relatively static for the second consecutive quarter, however villas in off-island locations such as Mohamed Bin Zayed City and Khalifa City continued to slide by 5% on average.
The most significant new supply brought to market was the Al Zeina project at Raha Beach, which comprises 952 apartments, 26 penthouses, 119 townhouses and 124 villas. Meanwhile, at Marina Square on Reem Island, despite receiving completion certificates for Zone A in March, uncertainty surrounds the handover dates to individual investors in Zones B, C and D.
“The strong rental demand we are witnessing is being driven by existing residents’ desire to upgrade and secure better value for money accommodation. This trend is set to continue as future improved quality accommodation is handed over in the coming months said Elaine Jones, CEO, Asteco Property Management.
In terms of sales, the market is still characterised by low sales volumes which consequently have had little effect on prices, but the level of sales enquiries is, as expected, increasing corresponding with the delivery of completed projects.
To try and stimulate sales activity in the market, Aldar has announced a rent-to-own scheme on unsold properties at Al Zeina and Al Bandar. Tenants will pay a fixed rent for two years with 100% of the first year’s rent and 90% of the second year’s rent converted into a deposit towards purchase at the current sales price, although no further details have been released so far.
“Rent-to-own schemes are an effective way of stimulating demand. Similar initiatives have been successful in the past, such as the Green Community in Dubai,” added Jones.
The Asteco monitor also found that Grade A fitted offices can now be secured for net effective rents in the region of AED1,850 per square metre plus service charge, with shell and core space averaging around AED1,500 per square metre plus service charge.
“Occupancy levels in some Grade B and Grade C level office towers are particularly low due to the unrealistically high rental pricing strategy adopted by some landlords,” commented Jones.