(MENAFN- Khaleej Times) There are optimistic signs of growth in the Abu Dhabi residential market with average rents in new projects starting to increase following the decision to press all public sector employees to relocate to the UAE capital, property consultants Cluttons said.
Besides the recent decree that all government employees must live in Abu Dhabi, the Sorouh-Aldar merger have also helped bring back confidence to marketplace, the independent chartered surveyors said in a report.
"The Dubai-to-Abu Dhabi migration is expected to continue throughout 2013 as existing leases in Dubai expire," it added.
The report said some areas of Abu Dhabi are defying the overall trend of declining rent prices and performing at an encouraging level. Areas that have benefited from the recent development of good quality residential communities, such as Raha Beach, Raha Gardens, Al Reem Island, Saadiyat and Al Reef, have all demonstrated rental price increases over the last six months which appears to continue throughout 2013.
Rental prices in Raha Beach, Raha Gardens, Al Reem Island, Saadiyat and Al Reef have risen 10 per cent to 25 per cent over the last six months amid increased demand, Cluttons said in its Abu Dhabi real estate report.
The report pointed out that the increases are linked to general market demand. This is being driven by an influx of people moving to Abu Dhabi from both Dubai and outside the region, as well as relocating within the city from older buildings, which lack equivalent facilities to the modern developments. The general standard of living and quality of build has improved in Abu Dhabi, which has also encouraged movement within the marketplace.
Average rents in Abu Dhabi have also become more affordable while Dubai rents have begun to rise, bringing the most sought-after areas of both cities closer together. For example, the average rent of a two-bed apartment in Dubai Marina is Dh125,000 per annum, while the average two-bed apartment rent in Al Reem, Raha Beach and Saadiyat range from Dh105,000-Dh145,000, dependent on quality. This has helped to encourage people to relocate to the capital.
"Recent announcements on future developments, investment into infrastructure and real estate, and the Sorouh-Aldar merger have also helped bring confidence to the marketplace. There are many positive signs that, as long as Abu Dhabi continues to offer enough jobs and improved lifestyle, people will continue moving to the city," said the report.
"While further stock is expected to be brought to the market throughout 2013, Cluttons believes that high-quality developments with good facilities will continue to be in high demand and experience rental increases."
The average two-bed rent in older buildings on the island is currently Dh95,000 per annum, a 10 per cent decrease over the past 12 months. The increased supply of new apartments is expected to put downward pressure on rents across the island as people choose to relocate to newer buildings.
Landlords in older buildings will be forced to further lower rents as vacancy increases, in order to secure a return on their investment. The redevelopment of older buildings will also be crucial to protect rents and reduce vacancy levels, if they are to compete with new stock entering the marketplace.
According to a recent Asteco Property Management report, average rents in Abu Dhabi declined by 12 per cent in 2012 and a further decline is expected this year as 17,000 new units enter the market.
"With an additional 17,000 residential units due for delivery in 2013, the performance of the Abu Dhabi residential leasing market will be strongly influenced by the impact of restrictions placed upon public sector workers, that they should reside in Abu Dhabi in order to claim a housing allowance and that all leases should be registered in the Tawtheeq system which precludes the sharing of accommodation," said Paul Maisfield, associate director and general manager for Abu Dhabi at Asteco Property Management.
According to Asteco, in 2012, 15,000 new units were delivered, comprising 9,000 apartments and 6,000 villas, respectively.
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