(MENAFN - Khaleej Times) Over 11,000 housing units mostly apartments are scheduled for completion in the remaining part of the year, adding more supply means lower rental values.
"Approximately 2,900 additional residential units were delivered in Abu Dhabi during Q2," said Abu Dhabi Real Estate Market Overview - Q2 2012' by Jones Lang LaSalle, a real estate investment and advisory firm.
The majority of these units are in up-scale Rihan Heights and Bloom Gardens in the Grand Mosque District, Burooj Views and Marina Blue on Marina Square and Amaya Towers on Shams. These deliveries bring the total residential stock to approximately 199,800 units at the end of the second quarter.
The report feared that many of these under construction housing projects which are scheduled for completion in the second half of the year "will experience further delays at the final stages of approval." Approximately two thirds of the upcoming supply comprises apartments, with the majority of the upcoming villa supply being within Emirati housing communities such as Al Falah and Watani, Jones Lang LaSalle report for the quarter said.
Most of the supply for delivery in 2012 comprises additional units in master planned developments including Reem Island, Al Reef Villas, Danet, Saadiyat Island and Rawdhat. Upcoming supply also includes Nation Towers on the Corniche, Al Bateen Park and Marasy in Bateen, it said. Although a large proportion of the residential pipeline announced prior to 2008 has since been delayed, the aggregate supply could still reach 238,000 units by the end of 2014, the report said.
The completion of new high-end apartment buildings will improve options for higher income residents and increase vacancies in lower grade assets as tenants upgrade.
Average residential asking prices within investment areas have dropped by a further four per cent in Q2, to Dh10,500 per square metre, a significant decline of 51 per cent from the peak of
Dh21,500 in Q4 2008.
"Asking prices for apartments are approximately Dh11,500 per square metre, whereas average asking prices for villas are approximately Dh9,500 per sq metre," the report said.
The sales market has witnessed increased activity in Q2 2012 with interest primarily from Emirati purchasers. The number of sales transactions has increased in line with completions in investment areas and improved market confidence.
A significant increase in supply have dropped rents in the quarter ended June 30 by four per cent to approximately Dh121,000 for prime 2 bedroom apartments, Jones Lang LaSalle said, adding "This registers a year-on-year decline of approximately 14 per cent from Dh140,000 in Q2 2011."
The softening in rents has affected some districts more than others with Al Raha Beach and Reem Island experiencing the most significant declines due to the quantity of supply and diverse ownership. The report saw "a widening gap between quoting rents for non investment areas and investment areas where foreigners have bought property."