Residents in Abu Dhabi are now able to access a wider array of affordable housing options, new data released by property consultancy CB Richard Ellis (CBRE) has suggested.
The firm’s second-quarter market report said that recent handovers on Reem Island had contributed to the levels of leasable stock, and that more units are expected to be completed during the second half of the year.
“This will add mounting pressure to already declining lease rates, with some newer areas of the city likely to encounter some short term oversupply as multiple buildings are handed over in a short period,” the report said.
CBRE stated that there was a widening differential on lease rates of 30 percent to 55 percent between ‘main island’ and ‘off-island’ locations. Mainland areas singled out by the agency as being more affordable included Khalifa City A & B and Mohammed Bin Zayed City.
In terms of the office sector, CBRE reported that average rents were five percent lower quarter-on-quarter. Average prime rates are now less than half the level registered during the peak of 2008.
The second quarter also saw the first commercial product on Reem Island released to the market, with some Sky Tower space coming online. Other notable handovers included the Silverwave Tower, in the Meena area of the city.
However, CBRE also said that the market for prime commercial property remains extremely high, pointing towards the considerable demand from high-profile investors for space in the Al Sowwah Square development.
Due to Ramadan and the conclusion of summer, CBRE predicted that activity in the third quarter would be limited, “with potential business expansions and major decision-making likely to remain on hold until late Q3 or early Q4 2010”.
“Government-led projects and infrastructure developments, including the proposed railway network, nuclear plant and automobile zone, remain important demand generators, and hopefully catalysts for further growth, not only in the real estate market, but for overall economic activity within the Emirate,” the report stated.