Abu Dhabi – Mubasher: Residential rents in the emirate of Abu Dhabi grew by on average by 3% during the second quarter of 2015 and are expected to continue rising this year as limited new supply enters the UAE capital, according to the latest report by Abu Dhabi Islamic Bank’s (ADIB) subsidiary MPM Real Estate.
A total of 1,647 units entered the market during Q2-15, bringing total additions to 2,397 units, whereas an additional 4,200 units are expected to be completed by the end of the year, the report revealed, adding that supply in 2015 represents only a 2.9% increase in total housing stock in the UAE capital, the lowest level of increase for five years.
Average annual growth has been around 5%, the report said, adding that year-on-year, “rents have increased by 10% over the same period last year leading to improved net income which has allowed many landlords to undertake improvements to their buildings,” according to the report.
Meanwhile, residential sale prices retreated 1% in quarter-on-quarter signaling a slowdown in demand and market uncertainty. Sale volumes were mostly driven by HNI and institutional investors with individual investors showing limited interest in Q2-15.
Overall sale prices fell by 10-13% from their peak in Q3-14 with Saadiyat Beach Residence being the only exception with an 8% rise, the report revealed, adding that “2015 has witnessed multiple bulk deals for outright sale and long term leases, clearly highlighting strong demand from Institutional investors and corporate tenants. Abu Dhabi’s market is maturing quickly and the ‘free-zones’ continue to attract new businesses to Abu Dhabi in addition, gross residential yields are stabilizing between 6.5% [and] 7.5%, which is attractive to most investors.”
“Although there is a decrease, the off-plan market continues to witness strong investor interest with Aldar and Bloom Properties achieving high sales volume. This clearly highlights that a larger investor base can be attracted if lower down payment options are offered as compared to the 25% down payment currently required for completed units from buyers seeking mortgage,” said Paul Maisfield, CEO of MPM Properties.
