It runs in the 'family': an impending housing bubble in Abu Dhabi?
Abu Dhabi’s housing shortfall would escalate to 51,000 units by the end of this year, a report said.
At the end of 2013, the fast expanding emirate saw total housing stock reaching 232,000 units, says Colliers International, a leading property advisory firm.
According to a report from another property advisory firm, JLL, residential stock increased by around 1,700 units in the first quarter of the year, bringing the total stock to around 238,000 units.
However, an estimated 9,000 housing units are expected to enter the market this year, to reach total housing supply to 241,000 against a demand of 290,000 housing units, says Colliers International.
The emirate is facing a rise in demand for housing by six per cent year-on-year with an additional demand of 15,208 units in 2014, according to Colliers.
It estimates that Abu Dhabi’s demand for housing would reach 360,000 units in 2018, growing at three per cent cumulative annual growth rate, as growth in economy will pick up and population increase would continue growing at 5.5 per cent annually.
It also estimates that office employees would rise five per cent year-on-year.
The property advisory firm estimated a shortfall of 119,000 housing units in 2018, as the demand is expected to reach 360,000 units.
Abu Dhabi’s real estate market is to experience a strong demand over the short to medium term as the economic and population growth continues.
Colliers estimates 44,000 units to enter the residential supply in the coming five years.
The removal of the rent cap in Abu Dhabi is likely to further contribute to an upward trend in rentals, making it more lucrative investment in terms of returns.
Foreign ownership of residential units are currently limited to high-end waterfront developments with the exception of Al Reef and Hydra. This limitation in Abu Dhabi’s residential market creates an opportunity for developing affordable housing within the emirate.
Rents grew 12 per cent year-on-year in 2014. In the fourth quarter of last year, rental values went up by nine per cent. The area which witnessed high growth in rents includes the localities of Al Raha, Al Reem Island and Corniche.
In terms of sales prices a growth of nine per cent has been reported.
In order to meet the rising demand for housing, just before the Cityscape Abu Dhabi 2014, Aldar Properties launched three new housing projects in and around Abu Dhabi with sales value estimated at Dh5 billion.
It offered registration at the property show, three projects of which two will be located in the investment zones of Al Raha Beech and Ansam on Yas Island while the third one will comprise of residential plots on Nareel Island located five minutes away from Emirates Palace is exclusively for the UAE nationals.
A total of 1,000 units would be added in two years, though all in posh segment.
According to Colliers survey, 40 per cent of the cumulative supply targets the high-end market.
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