By Staff writer
New CBRE report says residents are becoming increasingly concerned about rising cost of living in UAE capital
Residential rents in Abu Dhabi rose by around two percent during the first quarter of 2015, according to a new report by CBRE.
The increase was marginally down from the three percent rise seen during the previous quarter but CBRE said demand remained strong in the first three months of this year.
Over the past year, average rental growth has been relatively consistent, ranging between 2-3 percent for each of the past four quarters.
This preceded an initial spike in rentals during the latter stage of Q4 2013 immediately after the removal of the rent cap, CBRE's Q1 2015 Abu Dhabi MarketView said.
Mat Green, head of Research & Consultancy UAE, CBRE Middle East, said: “Whilst the timing is still to be confirmed, it is widely expected that a new rental matrix will be introduced in Abu Dhabi to replace the old rental cap system.
"Following a 12 percent increase in residential rentals during the past year, many residents in the capital are becoming increasingly concerned over the escalating cost of living, particularly as utility rates are also on the rise,” said Green.
According to the report, overall residential leasing demand has remained strong during the quarter, with the highest demand recorded for two-bedroom units.
CBRE said over the next four years, around 35,000 new residential units could be completed in the capital.
The clear focus of this development remains within the emirate’s investment zone areas, specifically Reem Island where the majority of new apartments are set to be delivered, it added.
Green added: “Although not operating in insulation, Abu Dhabi’s substantial fiscal surpluses will help the emirate to combat the negative effects of lower oil prices. This is strongly reflected in the 2015 public spending budget, which has maintained the recent high levels of investment into social infrastructure.
"With limited new product offerings to reignite market interest, residential sales are expected to remain relatively stable in the short term, with investors happy to wait out during current economic uncertainties before making moves. There is also a desire to see conclusive decisions made on proposed real estate market regulations and legislations."For all the latest real estate news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.