Villa prices raised by 16% and apartments prices go up by 15%. Rental rates went up by 10% apartments and 9% for villas; even rental rates increased by 10%, and 9% for apartments and villas respectively. This means that the demand for prime spaces continues to grow.
For 2015, investors in the real estate sector in Dubai and Abu Dhabi can expect continued rental growth and stable capital values, thanks largely in part to the strong performance in 2014 according to the latest Abu Dhabi real estate report from Asteco, Middle East’s largest independent full service real estate company.
In the Abu Dhabi Property Review: 2014 Highlights & 2015 Outlook of Asteco reported that Abu Dhabi’s real estate market had experienced growth over the recent years and 2015 will continue this trend. There will be a stream of growth in real estate, specifically in rentals and investments.
On 2014, the average sales rates for apartments increased by 15%, villas 16%. Volume of transactions declined in H2 due to the shortage of quality projects for sale in the secondary market, which is a good sign for real estate investors because the demand clearly outweighs the supply. The high sales volumes experienced at the newly launched projects in Ansam, Al Hadeel and Mamsha Al Saadiyat proved that demand for quality projects exists.
“Popular master-planned developments for sale included Saadiyat Island and Al Raha Beach while Reem Island proved to be an attractive area providing more mid-market units. We expect apartment sales prices to remain stable this year as the market becomes more competitive due to the imminent handover of new projects,” said Jerry Oates, General Manager, Asteco Abu Dhabi.
Year-on-Year comparisons starting from 2008 to 2014 highlight the continuous apartment sales price growth since 2012, up by 48% for all areas combined. Sales price in Al Muneera at Al Raha Beach is now priced at an average of AED 1,425 per square foot, up 21% compared with last year. Meanwhile, rates at Reef Downtown also climbed 21% to an average of AED 1,000 per square foot. Marina Square also saw a 17% increase to an average of AED 1,375 per square foot.
Villa sales prices had strong growth too, growing 47% on average for Al Raha Beach, Golf Garden and Al Reef Villas during the period.
According to the report, the villa sales market will be almost stagnant as there will be limited prime and high-end villa projects available for sale in the primary and secondary markets in 2015.
Rental rates for apartment were up by 10%, while villas rentals rose by 9%. A prime two-bedroom apartment currently rents for AED 175k-180k per annum with high-end units achieving AED 140-175,000. Mid to low-end units records an affordable AED 90k-120k.
Villa rental rates are expected to increase during 2015 due to a shortage in quality villa units with occupancy rates expected to remain high.
An average four-bedroom villa could be leased for AED 239,000 per annum in Q4 2014.
The biggest increases in rental rates in 2014 were on Saadiyat Island and Marina Square on Reem Island. The year was also marked by a positive level of transaction activity as tenants continued their flight to quality.
New mid to high quality developments at still relatively affordable rents are encouraging relocation by tenants to upgraded accommodation, with older properties and lower quality projects being placed under increased rental and occupancy pressure.
The Abu Dhabi rental market in 2015 is expected to see continuous strong levels of demand. A range of new projects are due for handover in 2015 including an anticipated 13,000 apartments and villas which will come online, will have an impact on the Abu Dhabi real estate market by creating greater competition, particularly in apartment rents.
-Jeremy Oates
-Jeremy Oates
Asteco expects this to continue in 2015 with occupancy rates in popular developments maintaining their current high levels.
“The Abu Dhabi rental market in 2015 is expected to see continuous strong levels of demand. A range of new projects are due for handover in 2015 including an anticipated 13,000 apartments and villas which will come online, will have an impact on the Abu Dhabi real estate market by creating greater competition, particularly in apartment rents,” said Oates.
Abu Dhabi’s office market was stable in 2014, as landlords of single-owned buildings maintained their asking rates. However, it is anticipated that as new developments such as ADDAX Tower on Reem Island hand over during the year, rates for multiple-owned office space in the Investment Areas could come under pressure as individual landlords compete to secure tenants.
Source: Roots Land Real Estate
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