A slowdown in transaction volume and more sustainable levels of rental and capital appreciation defined Abu Dhabi’s residential sector performance according to Asteco’s Q2 2014 real estate report.
On average apartment sales prices increased by 4% quarter-on-quarter, and 29% since Q2 2013, while villa sales prices remained relatively stable over the same period, showing an average increase of just 2%.Average apartment rental rates ran in parallel with villas recording modest Q2 growth rates of up to 8%.
“Ongoing tenant preference for newer, master planned communities drove demand for apartments in prime developments within investment areas, while affordable villa locations continue to be popular,” said Jerry Oates, General Manager, Asteco Abu Dhabi.
“Market sustainability will be further buoyed by Abu Dhabi’s plans to launch its own rental index this year, designed to create a more transparent market for UAE national investors, regulating maximum rental increases,” he added.
The market received a vote of confidence from investors following the successful off-plan sales launch by Aldar, with its Al Hadeel project at Al Raha Beach, selling out in a matter of hours and Ansam on Yas Island selling approximately 300 units out of 540.
Buyers snapped up all 223 Al Hadeel apartments and townhouses, which ranged from AED 1,350 to AED 1,450 per square foot for an apartment whereas apartments at Ansam achieved sales prices of between AED 1,450 to 1,550 per square foot.
Growth for low to mid-end apartment unit developments, such as Reef Downtown, dropped to 2% in Q2, implying that prices reached a peak in Q1 2014. Prices, however ranged from AED 900 to AED 1,150 showing an impressive 55% year-on-year figure.
Raha Beach / Al Muneera saw 6% growth, asking for up to AED 1,500 per square foot. , bringing year-on-year growth to a healthy 27%.
The stabilisation in villa sales prices nevertheless saw sales prices for a three-bedroom home in Hydra Village grow by 4% to reach AED 1.3 million while the standard Saadiyat Beach Villas rose by 2% to hit AED 5.8 million for three bedrooms.
Rental rates for prime two-bedroom apartments on Abu Dhabi Island rose by 5% to reach up to AED 200,000 per annum, while similarly sized properties in the investment areas of Al Raha Beach and Saadiyat Island, also hit the same levels, up just 1% quarter-on-quarter.
For villas, a three-bed property on Abu Dhabi Island can still be rented for an average of AED 190,000, whilst the affordable locations of Hydra Village and Al Reef let for AED 95,000 and AED 140,000 per annum respectively. At the top end, Saadiyat Island’s luxury three-bedroom residences rent for up to AED 310,000, a 5% growth since Q1 2014.
Abu Dhabi office leasing figures recorded moderate quarter-on-quarter rental growth of 3% for Grade A fitted commercial space whereas ‘average quality’ Grade B commercial rates remained stable, for both fitted and shell & core.
On Abu Dhabi Island, Grade A office space achieved net effective rental rates estimated at AED 1,700 per square metre for fully fitted space; while rental rates for upscale Sowwah Square remain unchanged over the last 12 months, as leasing is on hold pending confirmation of free zone status.
Rental rates for Grade B office space stood at AED 800 per square metre for fitted and AED 700 for shell & core with good quality older stock also renting from AED 700 to AED 1,100 per square metre.