Prime Abu Dhabi residential prices up 9% in Q1

Jones Lang LaSalle also says removal of rent cap in UAE capital expected to lead to further rent rises this year
Skyscrapers stand on the skyline viewed from the Central Market in Abu Dhabi, United Arab Emirates, on Wednesday, Jan. 11, 2012. Abu Dhabi, the oil-rich sheikhdom that spent 36 billion Dirhams ($9.8 billion) bailing out its biggest developer in 2011, will probably reach for its checkbook again as property companies in the United Arab Emirates face a stalled market and deadlines to repay debt. (Credit: Bloomberg News)
By Andy Sambidge
Fri 25 Apr 2014 10:08 AM

Prime residential prices in Abu Dhabi soared by nine percent during the first quarter of 2014 as the market continued to grow, according to a new report by Jones Lang LaSalle.

It said positive investor sentiment and increased demand from end users were driving growth, leading to the fifth successive quarter of price rises, although it added that the volume of transactions remained limited during Q1.

It added that prices for prime, high quality units rose by 25 percent during 2013.

The report also noted that demand in the residential rental market continued to rise, "driven by new job creation and government policies", leading to 17 percent rental growth for prime, high quality units during 2013 and four percent growth during Q1.

Jones Lang LaSalle said the removal of the five percent rent cap in Abu Dhabi is expected to lead to rents increasing further this year.

The report added that the first quarter of 2014 also saw further stabilisation of the office and hospitality sectors in Abu Dhabi. Retail rents for malls on Abu Dhabi Island witnessed a slight increase during Q1.

Residential stock increased by around 1,700 units in Q1, bringing the total stock to around 238,000 units. Additions to supply included units within Reem Island, Saadiyat Island and Al Reef.

The overall office market remained over-supplied, the report said, with new additions to supply continuing to rise. Large-scale demand continued to be dominated by government entities and state-owned enterprises, although there were indications that private sector occupier demand is starting to increase.

Office supply currently stands at 3.1 million sq m, with an additional 78,000 sq m of expected to enter the market during 2014.

For retail, the report said there currently remains a limited supply of high quality malls relative to the spending power of the population. Retail stock remained stable at 2.2 million sq m this quarter with no major deliveries.

David Dudley, head of Abu Dhabi office at JLL MENA said: "It is encouraging to see further signs of growth and recovery. The general theme is selective recovery - with different sectors at a different stage of recovery, and the residential sector leading the way.

"A two tier market exists with a significant divergence between high and low quality product (in terms of quality of location, design, functionality, asset management etc). Sustained market recovery is very much dependent on continued government investment in to infrastructure and economic development to boost demand."

Subscribe to our Newsletter

Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.