Property

Abu Dhabi luxury apartment rents rise 6% in Q2, report finds

By Jerusha Sequeira

Posted on July 13, 2015

More than 3,600 units to start arriving in the market from 2018, according to property firm Asteco

PHOTO: New Abu Dhabi rental leases were on average 8% higher than in the first three months of the year, Asteco found. Credit: Asteco

Apartment rents for prime buildings in Abu Dhabi rose 6% in the second quarter of 2015, following a slow start to the year, according to a report by real-estate firm Asteco.

Rents on the majority of prime, high and mid-quality developments increased by 4-6% on contract renewal, while new leases were on average 8% higher than in the first three months of the year, Asteco found.

Some of the most popular prime developments in the capital, like the Eastern Mangroves and St Regis Residences by TDIC recorded rent renewal increases of 12% and 10% respectively, with long waiting lists for prospective tenants. This indicates a continued lack of prime quality supply in Abu Dhabi, Asteco said in a statement.

However, new apartment stock is set to enter the market from 2018, with a number of high-profile launches in Q2, including Aldar’s West Yas and Mayan on Yas Island; Tamouh’s Horizon Towers and Aabar’s The Kite Residences on Reem Island; and Aldar’s Meera at Shams Abu Dhabi.

“These launches will add in excess of 3,600 new apartment units to the market from 2018, in addition to the 1,800 units announced during 2014, bringing much needed new supply to Abu Dhabi’s market,” said Jerry Oates, general manager at Asteco Abu Dhabi.

“This is also a strong indication that developers are optimistic about market prospects, and both buyers and tenants will ultimately benefit from more choice.”

Rental demand for quality villa stock in high-end developments is also expected to be strong over the coming months, with continued optimum occupancy rates for available stock. In the absence of any major handover of new villa stock before 2017, Asteco predicts an increase in villa rental rates over the next few months.

Meanwhile, sales prices for apartments and villas have remained steady, in keeping with the trend over the past year. Year-on-year figures, however, show an average positive growth of 4% in apartment sale prices. Demand for high-end villas has also been positive in Q2, with notable highlights including TDIC’s Jawaher Al Saadiyat and Hidd Al Saadiyat developments.

While residential units show strong growth potential, the office sector remained stable in Q2 2015, due to significant availability in key locations, the Asteco report said. However, the commercial sector continues to see slow but steady growth, with a 7% increase recorded over the last six months.