Villa market rental rates in Abu Dhabi and Dubai were strong during the first quarter of 2021 despite the ongoing economic challenges and Covid-19 concerns, according to new research.
Real estate consultants Asteco said the rates were driven by a surge in demand within well-developed villa communities – mature and emerging.
Its report said the Abu Dhabi residential market delivered approximately 1,700 apartments and 50 villas during the first three months of 2021 with an increase in demand for villas, particularly within Yas Island, Al Raha Beach, Saadiyat Island as well as the Al Reef community.
Although average villa rental rates remained more or less unchanged over Q1, there was a significant increase in rents for West Yas, Golf Gardens and Saadiyat Beach Villas.
According to the report, demand for completed villas for sale remained high in Q1, predominantly driven by the limited availability of quality properties offered at attractive prices.
Affordable communities such as Al Reef also noted heightened interest and an average quarterly rise in sales prices of 7 percent, Asteco said, adding that apartment sales prices remained broadly unchanged over the same period due to limited demand.
It also said that due to a large majority of commercial tenants looking to upgrade or upsize due to increased affordability within the mid to high end sector and the continued incentives offered by landlords, the office sector remained one of the most challenged asset classes in the emirate.
Landlords also increasingly offered incentives related to payment and lease terms, with several Grade A and B office buildings experiencing a rise in demand from Chinese and Israeli companies looking to establish a base in Abu Dhabi.
In Dubai, Asteco noted that no large-scale villa developments were handed over during the first three months of 2021, while apartment supply stood at nearly 2,000 units and office completions were marginal at 70,000 sq ft of space.
The rental market in Dubai during the first quarter for apartments and villas increased, with average rental rates growing by 1 percent and 4 percent respectively.
However, rates were still 10 percent and 2 percent less for apartments and villas when compared to the same period last year.
Asteco said the surge in demand for villas can be attributed to changing working and living habits.
Similar to the rental market, the current situation has also affected sales prices to varying degrees with an average quarterly growth of 3 percent for apartments and 6 percent for villas.
Villa sales prices rose most in Arabian Ranches, Meadows and Springs – 9 percent on average over the quarter while best performing apartment sales (5 percent) were seen in Jumeirah Village and Dubai Sports City.
Office rental rates in Dubai continued their downward trajectory with quarterly and annual drops of 3 percent and 18 percent, the Asteco report added.
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