Rent prices rising in quality residential locations in Abu Dhabi

Some areas of Abu Dhabi are defying the overall trend of declining rent prices and performing at an encouraging level which is set to continue in 2013, it is claimed. Good quality residential communities such as Raha Beach, Raha Gardens, Al Reem Island, Saadiyat and Al Reef, have all demonstrated rental price increases over the last six months, according to real estate specialist Cluttons.

The increases are linked to general market demand and the firm says this is being driven by an influx of people moving to Abu Dhabi from both Dubai and outside the region, as well as relocating within the city from older buildings, which lack equivalent facilities to the modern developments.

It adds that the general standard of living and quality of build has improved in Abu Dhabi, which has also encouraged movement within the marketplace. The recent decree that all government employees, as well as those who work for government-affiliated companies, must live within Abu Dhabi has also helped fuel residential property demand.

Quote from PropertyCommunity.com : “As anyone who commutes regularly between the UAE’s two largest cities Abu Dhabi and Dubai knows, the previously barren desert land between them is rapidly being developed. The past two years have seen a number of significant projects announced many of which will give rise to urban communities populating previously undeveloped areas and creating new residential, business and industrial hubs for the UAE.”

The Dubai to Abu Dhabi migration is expected to continue throughout 2013 as existing leases in Dubai expire. Indications are that tenants working across various sectors including the airline, construction, energy and professional services industries are moving to Abu Dhabi. Average rents in Abu Dhabi have also become more affordable whilst Dubai rents have begun to rise, bringing the most sought after areas of both cities closer together.

As an example, the average rent of a two bed apartment in Dubai Marina is AED125,000 per annum, while the average two bed apartment rent in Al Reem, Raha Beach and Saadiyat range from AED105,000 to AED145,000, dependent on quality. This has helped to encourage people to relocate to the capital. ‘Recent announcements on future developments, investment into infrastructure and real estate, and the Sorouh/Aldar merger have also helped bring confidence to the marketplace. There are many positive signs that, as long as Abu Dhabi continues to offer enough jobs and improved lifestyle, people will continue moving to the city,’ the report points out.

In the last six months Al Reem has seen rents on two bed apartments increase by 10% and the current average rent is AED105,000 per annum. In Raha Beach there has been a 22% increase on two bed apartments with an average rent of AED135,000. Al Reef has seen a 17% increase on two bed villas to an average of AED95,000 per annum, Raha Gardens has an 18% increase on two bed villas to AED160,000 per annum and in Saadiyat there has been a 25% increase on two bed apartments to an average of AED145,000 per annum.

Cluttons says that in Raha Beach and Raha Gardens low supply of stock has helped to drive up prices with developments proving to be popular with people moving to the city. Al Reem has also benefited from the decree, accounting for 25 to 30% of enquiries for the location. The development is well located with easy access to the city. The buildings within Al Reem benefit from having good facilities and have attracted people previously living in older buildings on the island, accounting for approximately 30% of all enquiries.

Whilst further stock is expected to be brought to the market throughout 2013, Cluttons believes that high quality developments with good facilities will continue to be in high demand and experience rental increases. ‘Landlords in older buildings will be forced to further lower rents as vacancies increase, in order to secure a return on their investment. The redevelopment of older buildings will also be crucial to protect rents and reduce vacancy levels, if they are to compete with new stock entering the marketplace,’ the report says.