By Staff writer
New report says rents in the UAE capital rose by about 17% during 2014; forecast to continue to rise in 2015
Average residential rents continued to increase during the fourth quarter of 2014, but at a slower pace than at the start of the year, according to a new report by real estate consultancy CBRE.
Its Q4 2104 Abu Dhabi MarketView said average market rents increased by around 3 percent quarter-on-quarter, and roughly 17 percent from the same period last year.
The report also forecast that rents will continue to rise during the first half of 2015 albeit at slower rates than the year-earlier period.
Mat Green, head of research & consultancy UAE, CBRE Middle East, said: "The delivery of new supply in recent months has increased competition for tenancies, resulting in a more cautious approach by some landlords who have become more realistic with their rental requests."
He added: "As the cost of living has risen over the past 12 months, there has been a more noticeable increase in demand for low to middle income units and also for non-prime areas of the capital. This in turn has driven rental growth in more affordable locations as a flight to quality continues."
According to the CBRE report, Q4 also witnessed an increase in interest from end-users looking to purchase their own homes, driven by imminent lease expirations or planned relocations due to the rising rental costs.
Residential properties situated on the outskirts of the city continued to gain popularity, principally due to affordability reasons.
The growing number of new schools, healthcare facilities and community retail centres is also helping to attract more family residents into the suburbs, according to the CBRE report.
The report also said the villa market continued to display more stable signs with limited available lease options and strong tenant loyalty resulting in limited volatility.
"Despite rising housing stock, the Abu Dhabi residential market continues to outperform most other property assets. In total, around 35,000 new residential units are expected to be completed over the next three years with a large portion being from within master-planned communities. Additionally widespread relocations are expected as residents look to move away from inferior properties," said Green.
The Abu Dhabi's office market, according to the CBRE report, remained largely stable during the quarter with minimal movement in either supply or demand levels recorded. No major new office supply was completed during the final quarter, leaving stock unchanged at around 3.66 million sq m.
According to the report, despite the challenging global environment, the local economy will be cushioned somewhat by the rise in public spending through infrastructure development, improvements in social services and other public facilities which will continue to fuel economic activities and property demand in the short term.
"For now, we expect the recovery in residential rental rates to continue, albeit at a slower pace than during the first half of 2014. For office rents, it is likely that rates for prime properties will remain steady, with limited new supply and a slow period for new demand," said Green.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.