(MENAFN - Khaleej Times) Prime developments in Abu Dhabi sustained rates while old properties witnessed rise in vacancy levels in the third quarter, according to property management company Asteco.
Tenants living in Abu Dhabi have been taking advantage of select new prime developments offering high quality finishes and amenities at competitive rates after 7,400 apartments and 1,675 villas were added to the UAE capital's property market since the start of 2012.
Many of the quality developments have generally been able to sustain their current rental rates over the last quarter given strong levels of demand. However, landlords of older buildings formerly considered prime, have seen vacancy levels increasing and rates falling as tenants relocate, Asteco said in its latest report for Q3.
"Consequently there is a widening rental gap between prime developments and the rest of the market," Asteco chief executive officer Elaine Jones said in a statement.
"In addition, the new regulations being implemented linking the renewal of residency visas with accommodation arrangements is starting to impact the market with an increase in demand for mid-to-low budget, two-to-three bedroom apartments in central Abu Dhabi," Jones added.
Apartments in good quality developments such as Al Raha Beach, Marina Square, and Shams Abu Dhabi, saw rental rates fall three per cent, two per cent and one per cent respectively, linked to the amount of supply available in these developments. In Marina Square, rental rates start at Dh95,000 for a two-bedroom apartment. It's a different story for apartments in older, less sought after buildings with inadequate parking, which witnessed falling rents of between four per cent and eight per cent. A lower quality two-bedroom apartment in Central Abu Dhabi, now commands in the region of Dh55,000 to Dh65,000 per annum.
Villa rental rates were relatively unchanged, with Al Reef showing the largest fall of four per cent over the past quarter. Villa rental rates in Al Raha Gardens, Hills Abu Dhabi and Golf Gardens were generally unchanged on average. At the top end of the market a four-bedroom villa in Saadiyat Beach now rents for a minimum of Dh275,000, whereas at Al Reef four "bedroom villas will only cost a prospective tenant between Dh125,000 and Dh130,000.
"Tenants are willing to pay a premium for quality, waterfront living in a mixed-use setting that has a community aspect," said Jones.
Apartment sales in Abu Dhabi during Q3 2012, followed a similar trend, to that of the rental market with sales prices for quality properties falling by an average two per cent across the board. A two-bedroom apartment in the popular Al Bandar development at Raha Beach now costs Dh11,724 per square metres. The villa sales market in Abu Dhabi saw limited transaction activity, therefore villa prices remained generally unchanged.
Commercial leasing activity continued to improve as quality office space became available at attractive terms. With over 24,000 square metres of leasable space, Nation Towers, which will be ready for tenant fit-out by the year end, is already 90 per cent pre-leased, with heavy demand from government entities.
"The bulk of requirements remain for small (less than 300sqm), fitted space at competitive rates," added Jones.