Abu Dhabi real es­tate to slow down

The Pak Banker - - BUSINESS -

Abu Dhabi's prop­erty mar­ket is ex­pected to see a no­tice­able slow­down in the next 12 months, com­pounded by a re­duc­tion in govern­ment spend­ing and stag­nant salary lev­els, says prop­erty ad­vi­sory firm Asteco.

In its lat­est UAE Real Es­tate Re­port, Asteco in its out­look for 2016 said low oil prices would ex­ert on­go­ing down­ward pres­sure on the mar­ket de­spite lim­ited pipe­line growth.

Fol­low­ing a slow but over­all pos­i­tive mar­ket per­for­mance in 2015, which saw apart­ment rental rates in­crease, on av­er­age, by five per cent, with prime projects achiev­ing up to 10 per cent growth, and 3-4 per cent growth for apart­ment sales prices, Asteco ex­pects a no­tice­able slow­down in the next 12 months, com­pounded by a re­duc­tion in govern­ment spend­ing and stag­nant salary lev­els. "Ex­pa­tri­ates make up around 75 per cent of the pop­u­la­tion in the cap­i­tal and are a ma­jor de­mand driver for res­i­den­tial prop­erty. So un­less there is a sig­nif­i­cant shift in labour re­quire­ments, we feel that the ex­ist­ing sup­ply and de­mand dy­namic will keep the mar­ket in equilibrium in the short to medium term.

In ad­di­tion, the new prop­erty law - No.3 of 2015 - should boost in­vestor con­fi­dence with im­proved sec­tor reg­u­la­tions across a num­ber of key ar­eas," said Jerry Oates, gen­eral man­ager, Asteco Abu Dhabi. A to­tal of 2,000 apart­ments and 100 vil­las were de­liv­ered last year in­clud­ing 850 units in phase one of Reem Is­land's Hydra Av­enue pro­ject, 160 units at Sea Side Tower, also on Reem Is­land, and 312 ser­viced apart­ments at Saraya's Creek Tower on the Cor­niche.

"The tem­po­rary re­moval of the rent cap also helped in­crease rental rates for mid to low end units in line with mar­ket rate as th­ese were pre­vi­ously un­der­priced. We are also, ex­pect­ing a slight in­crease in rental rates for some pop­u­lar projects, as well as some older build­ings in­side Abu Dhabi City that didn't in­crease their rates in 2015," added Oates. At the top end of the mar­ket, prime two-bed apart­ments on Abu Dhabi Is­land were rent­ing at an av­er­age of Dh191,000 in 2015, up from Dh175,000 the pre­vi­ous year, while high-end two-beds in Cen­tral Abu Dhabi jumped from Dh145,000 to Dh150,000 and at Al Raha Beach from Dh155,000 to Dh161,000. At the mid and lower end, Reef Down­town in­creased from Dh100,000 to Dh104,000 and Cor­niche two-beds from Dh 120,000 to Dh125,000.

Abu Dhabi will add 3,000 apart­ments and 850 vil­las to its res­i­den­tial sup­ply this year, in­clud­ing Wave Tower with 229 units and So­laris Tow­ers with 600 units on Reem Is­land, and phase one of Hidd Al Saadiyat will add 488 vil­las. With four per cent recorded growth in apart­ment sales prices, pop­u­lar Raha Beach com­mu­ni­ties Al Ban­dar and Al Zeina moved up­wards from Dh1,550 per square foot to Dh1,650 and Dh1,200 to Dh1300 re­spec­tively. For vil­las, zero per cent growth last year saw per square foot sales prices stuck at Dh 1,020 for Golf Gar­dens, Dh650 for Hydra Vil­lage and Dh1,500 for the Saadiyat Beach Vil­las.

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