Affordable residences generate solid demand in Abu Dhabi
Affordable residences continue to generate solid demand and with it modest rental growth, in some cases up to 2 per cent, according to the Q1 2016 Abu Dhabi MarketView by global real estate consultancy firm CBRE, just ahead of Cityscape Abu Dhabi taking place this week.
This resulted in no change in the average market rental rate, which has remained stable. Conversely larger apartment units and some premium properties in the capital are now experiencing softening rentals.
“Lease rates in areas such as Corniche and Khalidiya remained high with prime rentals for 1-BR and 2-BR units currently around AED120,000 and AED180,000 respectively. Residential accommodation within central locations remained the most popular option for smaller household sizes and single occupants, primarily due to the ease of access to transportation networks and proximity to a variety of social facilities and commercial establishments,” said Mat Green, Head of Research & Consulting UAE, CBRE Middle East.
He continued, “With a continued shortage of affordable homes in the capital, rental levels for lower priced residences will remain strong, with the residential market gravitating towards value amidst sustained growth in the cost of living.”
According to the report, the residential sales market remained largely muted during the quarter, with weak appetite for property purchases, in line with overall market sentiment. Similarly, there was no major change in average residential prices, which remained broadly stable.
“Al Raha Beach and Reem Island remain popular investment locations with typical sales rates ranging from AED14,265 – 17,760/m2. Al Reef and Hydra Village, which serve as more cost sensitive locations, had prices ranging between AED8,500 12,375/m2.”
When looking at the office market, demand for smaller office spaces (i.e. <500 sqm) remains relatively buoyant, reflecting the emergence of greater price sensitivity. During the quarter, average prime office rentals remained steady at around AED1,900/m2/annum, with Shell & Core units broadly ranging between AED1,350–2,000/m2/annum, whilst CAT A accommodation generally ranges from AED1,600– 2,200/m2/annum.
In February 2016, AUH airport welcomed around 1.86 million passengers, which was up by around 9.0% from same period last year. Aircraft movements in February 2016 also grew by 3.5% reaching 13,307 from the 12,852 recorded in February 2015. The robust growth in passenger traffic at the airport mirrors the solid efforts poured into improving the facilities and services within the terminal facility.
However, the Emirate’s passenger growth was not sufficient to avoid a drop in hotel revenue performance. According to data from STR Global, Abu Dhabi’s year to date occupancy rate to February 2016 was 75.7%, down by around 2.0% from the same period last year.
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