- The recent decree that all government employeesmust live in Abu Dhabi has helped fuel demand
- Sorouh/Aldarmerger have also helped bring confidence to market place
Dubai, UAE: 7February 2013 –Cluttons, the real estate specialistwhich has enjoyed a dedicated Middle Eastern presence since 1976,has found that areas of Abu Dhabi are defying the overall trend of declining rent prices and performing at an encouraging level.
Areas which have benefited from the recent development of good quality residential communities, such as Raha Beach, Raha Gardens, Al Reem Island, Saadiyat and Al Reef, have all demonstrated rental price increases over the last six months which appearset to continue throughout 2013.
The increases are linked to general market demand.This is being driven by an influx of people moving to Abu Dhabi from both Dubai and outside the region, as well as relocating within the city from older buildings, whichlack equivalent facilities tothe modern developments. The general standard of living and quality of build has improved in Abu Dhabi, which has also encouraged movement within the marketplace.
The recent decree that all government employees, as well as those who work for government-affiliated companies, must live within Abu Dhabi has helped fuel residential property demand. The Dubai to Abu Dhabi migration is expected to continue throughout 2013 as existing leases in Dubai expire.Indications are that tenants working across various sectors including the airline, construction, energy and professional services industries are moving to Abu Dhabi.
Average rents in Abu Dhabi have also become more affordable whilst Dubai rents have begun to rise, bringing the most sought-after areas of both cities closer together. For example, the average rent of a two bed apartment in Dubai Marina is AED 125,000 per annum, while the average two bed apartment rent in Al Reem, Raha Beach and Saadiyat range from AED 105,000 – 145,000, dependent on quality. This has helped to encourage people to relocate to the capital.
Recent announcements on future developments, investment into infrastructure and real estate, and the Sorouh/Aldar merger have also helped bring confidence to the marketplace. There are many positive signs that,as long as Abu Dhabi continues to offer enough jobs and improved lifestyle, people will continuemoving to the city.
Average rent increases of two beds within the following areas over the last six months:
• Al Reem – 10% increase on two bed apartments. Current average rent AED 105,000 per annum
• Raha Beach – 22% increase on two bed apartments. Current average rent AED 135,000 per annum
• Al Reef – 17% increase on two bed villas. Current average rent AED 95,000 per annum
• Raha Gardens – 18% increase on two bed villas. Current average rent AED 160,000 per annum
• Saadiyat – 25% increase on two bed apartments. Current average rent AED 145,000 per annum
- Raha Beach and Raha Gardens: These areas have seen rent increases that are linked directly to the decree, accounting for 40% of the enquiries Cluttons receives for these locations. Low supply of stock within these locations has helped to drive up prices with developments proving to be popular with people moving to the city.
- Al Reem: This district has also benefited from the decree, accounting for 25–30% of enquiries for the location. The development is well located with easy access to the city. The buildings within Al Reem benefit from having good facilities and have attracted people previously living in older buildings on the island, accounting for approximately 30% of all enquiries.
- Saadiyat:Has also benefited from the decree. While rent increases are market-driven, they are also influenced by the phased delivery of new apartments, which has helped to maintain demand.
- Al Reef Villas: This has proved to be an attractive option for families and people looking for villas at a more affordable rate. The villas offer good value for money for people wanting more space.
Whilst further stock is expected to be brought to the market throughout 2013, Cluttons believes that high quality developments with good facilities will continue to be in high demand and experience rental increases.
The average two bed rent in older buildings on the island is currently AED 95,000 per annum, a 10% decrease over the past 12 months. The increased supply of new apartments is expected to put downward pressure on rents across the island as people choose to relocate to newer buildings.
Landlords in older buildings will be forced to further lower rents as vacancy increases, in order to secure a return on their investment. The redevelopment of older buildings will also be crucial to protect rents and reduce vacancy levels, if they are to compete with new stock entering the marketplace.