THE prices of apartments and villas in Abu Dhabi, UAE, have seen an increase in the first quarter with rental rates for prime properties also going up, showing the changing patterns of supply and demand in the emirate, says a report.
According to the Asteco Q1 2014 real estate report, the average apartment sales prices increased by nine per cent, two per cent less than the previous quarter. Average villa sales, climbed six per cent during Q1 2014, three per cent higher than the previous quarter.
Meanwhile, residential rental rates softened further in Q1 2014, especially at the lower end of the Abu Dhabi Island quality scale, with little or no increase in some areas, while high-end properties in investment areas recorded modest increases of between one and three per cent.
“Rental rates were driven by tenants relocating from Abu Dhabi Island to higher quality and more modern buildings typically within investment areas. However, prime properties situated on the corniche and Khalidiya did continue to see high occupancy levels and retained strong premiums,” says Jerry Oates, general manager, Asteco Abu Dhabi.
“Moving forward rental rates are likely to witness moderate growth during the course of the year, as although significant supply was initially forecast for handover, unanticipated delays could push deliveries to early 2015 thereby leading to more stability in supply/demand balance over the year,” adds Oates.
In terms of sales prices, there was robust demand for apartments at Al Raha Beach due to limited availability, with rates now between Dh1,000 and Dh1,550 per sq ft ($272 to $422). The Gate Towers at Shams Abu Dhabi have also benefited from increases following their recent handover, which saw prices increase by 19 per cent to Dh1,400 per sq ft ($381) on average.
Low to mid-end developments, such as Reef Downtown, continued to record price increases above market averages, as buyers searched for more affordable options. Prices at Reef Downtown started from Dh900 ($245) per sq ft, representing a 21 per cent increase from the Q4 2013.
Villa sales price growth was predominantly driven by a lack of supply for freehold villa developments, especially within the affordable segment. For instance, sales prices for Al Reef Villas grew by 50 per cent over the last 12 months. On average, a three-bedroom villa now costs around Dh1.95 million ($530,900) compared to Dh1.65 million ($449,200) a year ago.
Rental rates for prime two-bedroom apartments on Abu Dhabi Island now average at Dh200,000 ($54,450) per annum, whereas similarly sized properties in the investment areas of Al Raha Beach and Saadiyat Island, currently lease for an average of Dh190,000 ($51,727).
At the lower end of the market, two-bedroom apartments on Abu Dhabi Island are renting for an average of Dh80,000 ($21,780) per annum while the same size apartment in the investment area of Reef Downtown will cost Dh95,000 ($25,863) per annum on average.
In terms of villas, a three-bed property on Abu Dhabi Island now costs on average Dh190,000 ($51,727), compared with Al Raha Beach and Saadiyat Island, where the same sized villa will cost Dh260,000 and Dh300,000 ($70,783 and $81,673) per annum respectively.