By Andy Sambidge
Rush of handovers expected in UAE capital in second half of 2013, says Asteco
Abu Dhabi is primed to offer mid-level investors an increasingly wide choice of properties during the second half of 2013 with a rush of handovers, according to a new Asteco report.
The existing residential supply will be augmented by the handover of 3,500 units at The Gate District, Shams Abu Dhabi and standalone tower projects, including Beach Towers, Oceanscape and Mangrove Place, as well as the first wave of affordably priced homes located within Hydra Village.
Asteco's H1 2013 Abu Dhabi real estate market report also noted improved transactional activity over the last few months and growing confidence buoyed by improved market sentiment driven by price increases in neighbouring Dubai.
The report highlighted sales price increases for apartments in Al Zeina at Al Raha Beach of up to 23 percent year-on-year. Reef Downtown experienced similar gains with a 20 percent year-on-year gain, while Al Bandar posted 15 percent rises.
John Stevens, managing director, Asteco Property Management, said: "With more units coming on-stream over the next six months and well-established communities offering improved facilities, good quality finishes and attractive leasing prospects, both investors and owner-occupiers are once more eyeing Abu Dhabi for long term investment potential."
However, the report also urged sellers to be realistic, as recent months have shown a trend towards above market value asking prices, which Asteco said appear to be leading to a slowdown in transactional activity over the coming months.
Asteco said at the higher end of the market there are few properties available below AED1,000 per sq ft.
It added that properties on Al Reem Island are expected to remain flat or even record some declines, impacted by potential weight of supply from the delivery of the Gate District and standalone projects.
Villa sales prices in Al Raha Gardens and Al Reef Villas rose by on 12 percent and 14 percent respectively against Q2 2102 figures, Asteco said.
Echoing Q1 2013 trends, prime residential developments have also experienced steady rental growth in the first half of the year, fuelled by consistent demand and lack of availability, with resulting rental increases of up to 10 percent year-on-year, the report added.
High-end communities within the large master plan developments of Al Raha Beach and Al Reem Island report occupancy levels of 65 percent or more, with Asteco predicting rental rate increases in the mid-term, albeit at a reduced pace.
The report said that the flight to quality continues in the rental market where mid-level property rental rates have declined over the last 12 months, bottoming out at their current levels.
This has also prompted Asteco to reclassify Abu Dhabi's rental market into newly re-banded tiers with the reclassification modelled using a basket of over 25,000 residential units across Abu Dhabi.
"The apartment market, in particular, has undergone considerable change since 2012, as large amounts of better quality supply were delivered. This has meant that projects previously considered high-end are becoming obsolete, and their position in the market reduced to mid- or even low-end status," said Stevens.