Approximately 2,000 residential units were delivered in Abu Dhabi during Q1, according to the latest real estate market report issued by JLL. The majority of these units were in the Al Bateen Park Development, Al Reef Community, Saadiyat Beach Residences and Nation Towers on the Abu Dhabi Corniche. These new deliveries add to the total residential stock, which is estimated to reach around 208,000 units by the end of Q1 2013.
An additional 14,000 units are scheduled to be delivered to the market during 2013 including Eastern Mangroves Promenade by TDIC, additional units on Saadiyat Island, Al Bustan Complex on 29th Street and several towers on Reem Island. There are also a number of units scheduled for handover during 2013 within National Housing communities including Al Falah by Aldar.
Although a large proportion of the residential pipeline announced prior to 2008 has since been delayed, the aggregate supply could still reach 252,000 units by the end of 2015. The majority of this additional supply is located within master planned areas such as Reem Island, Saadiyat Island, Danet, Saraya and Rawdhat.
Residential performance – sales price
Average residential asking prices within investment areas have increased in Q1 2013 to reach AED 11,000 per sq m. This represents a significant increase of 8% from AED 10,200 sq m in Q4 2012.
Average asking prices for apartments are approximately AED 12,000 per sq m while the average prices for villas are approximately AED 9,900 per sq m.
These increases are restricted to the performance of prime buildings within Investment Areas and do not reflect a market-wide recovery.
The increase in asking prices over the past quarter can be attributed to a combination of factors including:
– Masterplanned areas are becoming more established and now offer better facilities and amenities
– With increased job stability some people preferring to buy property rather than renting and this demand is concentrated in Investment Areas
– There is also additional demand from investors looking to capture price growth from a potential future upswing
– Abu Dhabi is also benefiting from the UAE’s status as a safe haven destination following political unrest in the wider region
Residential performance – rents
Average asking rents for prime two bedroom apartments reached AED 130,000 per annum in Q1 representing an increase of approximately 8% from Q4 2012.
As with the sales market, this improvement does not represent an overall market recovery but is largely restricted to selected prime developments where performance has improved due to a number of factors including:
– More community facilities now being completed within masterplanned areas
– Job growth from major infrastructure projects such as the expansion of Abu Dhabi Airport
– Limited availability of high quality units for private rental
– Initial relocation of Abu Dhabi government employees from Dubai in response to new regulations
In contrast, the wider market continues to experience declining rents, resulting in a further divergence of residential market performance. While prime buildings have shown signs of stabilization and selective recovery, secondary stock continues to experience downward pressure on rents.
The properties that will experience the strongest rental recovery are those focused on end user requirements, providing a high level of amenity and facilities in addition to sufficient parking.
Rents in Abu Dhabi have also become relatively more affordable, as those in Dubai have begun to rise. This has helped to encourage more renters to consider relocating to the capital.