The leasing market in Abu Dhabi remained strong with good levels of demand increasing upward pressure on average rental rates by as much as 8%, particularly in the high-end segment driven by tenants seeking quality and those seeking the most affordable areas.
It was also a similar story for the sales market with improved values in sought-after, established communities, with some prices up on average by as much as 13.5%, says the latest Q1 2013 real estate report from Asteco.
“The rental gap is narrowing between Abu Dhabi and Dubai, which combined with improved quality, means that Abu Dhabi now has a more competitive offering. Many newcomers to the UAE are also now preferring to live in the UAE capital rather than commute from Dubai,” said Paul Maisfield, Associate Director and General Manager, Asteco Property Management in Abu Dhabi.
Apartment rental rates have grown on average by 8% since the end of 2012 in Al Raha Beach and the MBZ and Mussafah areas respectively while Khalifa ‘A’ and ‘B’ as well Muroor posted modest 3% rental rate growth.
A two-bedroom apartment in Saadiyat Beach now commands an average rental rate of between AED135,000 and AED190,000 and rates for two-bedroom properties in the Al Raha Beach Area grew to between AED125,000 and AED170,000. More affordable two-bedroom apartments in MBZ and Mussafah were renting on average for between AED45,000 and AED55,000 per annum.
A three-bedroom villa in MBZ/Mussafah now commands between AED80,000 and AED105,000 on average per annum, while the similar sized-villas in Al Reef rent on average for AED105,000 to AED120,000 per annum.
In terms of sales prices, apartments in Al Bandar at Al Raha Beach grew on average by 13.5% during the first quarter of 2013, Al Raha Beach Al Muneera gained 8% on average and the Sun & Sky Towers development at Shams Abu Dhabi grew by 7%. Other areas posted modest gains of around 3% with the exception of Al Reef Downtown which saw little movement.
A two-bedroom apartment in Al Bandar now costs AED13,445 per square metre (AED1,250 per square foot), while in Al Muneera, a similar sized-apartment is now valued at AED 10,756 per square metre (AED1,000 per square foot). In Shams Abu Dhabi, a two-bedroom apartment is valued at AED12,101 per square metre (AED1,125 per square foot).
Villa sales prices in Al Raha Gardens, Golf Gardens and Al Reef Villas made modest gains of between 1 and 2%. A three-bedroom house in Al Reef Gardens now costs an average of AED1.3 million, while three-bedroom villas in Golf Gardens and Al Raha Gardens are priced at AED2.6 and AED1.8 million respectively.
“We have witnessed an improvement in the sales market within certain established projects, particularly Al Bandar, which has seen a double-digit rise in average sales values since the beginning of the 2013,” added Maisfield.
There was little movement in office rentals in Abu Dhabi during Q1 2013 as most of the relocation demand from the government sector and from companies moving from ‘illegal’ villas was mostly satisfied in 2012. New international companies still preferred to set-up in Dubai, leaving the majority of leasing enquiries to come from internal movement of existing companies.
Grade A recent- build fitted office space remained at AED1,600 per square metre per annum, while grade A shell and core rental rates were unchanged on average at AED1,250 per annum.