Where you can rent one-bedroom unit for Dh50,000 in Abu Dhabi…
Tertiary areas, says CBRE; Also Dh30,000 on offer for a studio
By 24/7 news
Published Sunday, October 25, 2015
Although affordable housing remains a major concern for residents in the UAE capital, apartments in tertiary locations offer economical housing options, according to CBRE.
“Rental prices for inferior housing units and those situated outside in tertiary locations ranged from Dh30,000-50,000 per unit per annum for studios and one bedrooms, respectively.
“The price differentiation is attributed to a combination of factors including quality, location, facilities and the proximity and accessibility of residential schemes to key commercial and social centres,” the global consultancy said in its third quarter report on Abu Dhabi Market View.
On an average, annual rentals for upper middle and high-end properties ranged from Dh60,000-Dh105,000 per unit per annum for studios and Dh85,000-150,000 per unit per annum for one-bedroom units.
“Smaller units such as studios and one-bedroom apartment units remain in strong demand,” the consultancy said.
Average rents declined one per cent in the third quarter 2015 compared with the second quarter 2015 though the annual growth rate stood at 8 per cent.
“The negative impact of the economic slowdown is evidently being felt in the Abu Dhabi residential market, with rents finally being checked after a series of quarterly rental growth, which stretched back to Q3 2013,” said the consultancy.
Villas beat apartments
In a statement, Mat Green, Head of Research and Consultancy UAE, CBRE Middle East, said that the market was showing some signs of fragmentation, with older and poorer quality apartments – particularly those in secondary locations – experiencing rental declines and dragging down the performance of the wider market.
“However, residential villas depict a contrasting trend, recording a small increase of less than one per cent during the third quarter.
“The limited supply, particularly within the main Abu Dhabi island, reinforced the steady performance of this segment.”
Higher income individuals and corporate occupiers continue to show a preference for master-planned developments, particularly established communities that offer residents access to facilities and services.
“As a result, prime developments across the capital have shown greater resilience to the emergence of more challenging market conditions during the quarter. This is reflected in the widening rental gap, as rentals for new leases remain unchanged from the previous quarter despite the prevailing market conditions,” said Green.
The low level of expected completions over the next three years will help provide a cushion against the ‘ill effects’ of the declining commercial market and a slowdown in some other sectors of the economy, which ultimately influences demand for housing.
On average, the emirate will see supply of 8,500 new housing units per annum over the next three years as against 11,000 units, which have been completed annually over the past five years.
Sales prices rose by one to two per cent year-on-year (y-o-y), with average rates ranging from Dh14,265 to Dh17,760 square metres. Prices for more affordable master plan developments, such as Al Reef and Hydra Village, remained unchanged the third quarter at Dh8,500 to Dh12,375 square metres.
Commenting on the outlook of the market, Green said, “With on-going economic challenges brought about by a period of lower oil pricing, US dollar strength, and sustained global uncertainty, the outlook for Abu Dhabi’s real estate market is for a period of further deflation in the short term.
“We expect to see a fragmented marketplace, with more pronounced declines to be experienced in secondary locations and for inferior products. As a result, we forecast that prime developments in the office and residential sectors, will see steadier performances across rentals and occupancy rates, aided by the availability of limited available stock, both currently and within the future development pipeline.”