Report also reveals that 65 percent of new office space leased by gov't entities
Residential rents in Abu Dhabi slipped by an average of 4 percent in 4Q2012 compared to the quarter immediately prior, according to data released by CBRE.
The real estate consultancy’s latest quarterly report found that the UAE capital’s residential stock had grown at a compound annual rate of almost 4 percent over the last four years, from 180,000 units in 2007 to 230,000 last year.
CBRE said that over the next three years up 45,000 new units could be delivered, mostly in planned communities outside the existing city centre, such as Reem Island.
CBRE said though that the lack of developed infrastructure was putting off some tenants. The biggest decline in rents was observed for larger properties and three-bedroom units, with rents falling 5 percent. Lease rates for two and three-bedroom properties were on average between AED125,000 (US$34,000) and AED150,000 per year.
Smaller units, such as studios and one-bedrooms, witnessed a slighter decline of 3 percent.
On the office segment of the property market, the CBRE report showed that around two thirds of new commercial office space leased in the emirate last year was by government-related entities.
“Government and quasi-public occupiers remain the primary source of new office demand, particularly for good quality accommodation. During 2012, around 60-65 percent of total market take-up was directly attributed to government related entities,” it said.
Matthew Green, head of research for CBRE's Middle East division, said this figure was higher than the global average, but this was due to the vast majority of large companies in Abu Dhabi, form oil and gas to construction, hospitality and retail, have direct links to the government.
Looking ahead to 2013, the report said as much as 1.5m sqm of new office space could be delivered to the market by 2016. This is likely to lead to rising vacancy rates.
“Both prime and secondary locations are suffering from a reduced number of tenant requirements, resulting in an increasingly competitive environment for the capital’s landlords,” the report noted.
Prime rents in the city during the fourth quarter are now at around AED1,600 to AED1,900 sqm.