Property prices in Abu Dhabi rose by up to 25 percent last year but the significant gains were limited to prime projects, Jones Lang LaSalle said on Sunday.
Its Abu Dhabi Market Overview Q4 2013 report said prices rose six percent in the final quarter of 2013 alone but the increases were not seen across the whole market.
Prime residential rents increased on average by 17 percent during the past year and by eight percent in the last quarter, the report said, adding that it was driven in part by new job growth, reduced commuting from Dubai and the removal of the five percent annual rent cap.
Residential stock increased by around 4,400 units in Q4, bringing the total stock in locations monitored by Jones Lang LaSalle to around 218,000 units. Additions to supply included units at Saadiyat Beach and Al Reef.
Commenting on the report, David Dudley, regional director and head of Abu Dhabi office at Jones Lang LaSalle, Middle East & North Africa, said: "The residential sector is leading Abu Dhabi's market recovery.
"Prime residential sales prices increased on average by six percent during Q4 2013, resulting in annual growth of 25 percent during 2013 - driven by improved investor sentiment and expectations of further price and rental growth."
The report also said the UAE capital's retail, hospitality and office sectors remained stable and are poised for recovery as supply and demand become more balanced.
Retail stock increased by approximately 67,000 sq m of gross leasable area in Q4 with the delivery of the World Trade Centre Mall on Hamdan Street and the Eastern Mangroves Promenade retail complex. Average retail rents remained unchanged at AED2,887 per sq m per annum for malls on Abu Dhabi Island and at AED1,990 per sq m per annum for malls outside Abu Dhabi.
While the hotel sector continued to witness new completions, the market saw occupancy rates increase to 67 percent during the first eleven months of 2013 and RevPAR was up by seven percent compared to the same period in 2012. Occupancy is at its highest level since 2008, Jones Lang LaSalle said.
Dudley added: "The short to medium term market outlook remains positive, driven primarily by major government-backed construction and infrastructure projects such as the airport expansion, transport improvements and leisure attractions.
"However, a long term sustainable market recovery remains dependent on further government initiatives to diversify the economy and generate new long-term sustainable employment growth. A sustainable recovery, is also dependent on the government continuing to implement further supply controls to ensure a balanced real estate market going forward.
"The Abu Dhabi market looks positive in the medium term, but there will be selective strong performers specific to sectors, locations, user requirements, property management and overall infrastructure."
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