Abu Dhabi second-quarter rents kept in check despite removal of cap

Asteco report reveals that apartment prices rose by 4 per cent in the second quater, while average rents in prime areas were up 5 per cent.

Al Muneera at Al Raha Beach in Abu Dhabi. Courtesy Better Homes

Abu Dhabi rent increases remained in the single digits during the second quarter despite the removal of a rent cap.

Rents for low-end properties in central Abu Dhabi grew by an average of 7 per cent over the quarter to between Dh70,000 and Dh100,000 a year for a two-bedroom apartment as landlords seized the opportunity to raise prices.

Rents for low-end homes in the Khalidiyah and Al Bateen areas rose by an average of 4 per cent over the three months to reach between Dh75,000 and Dh100,000 for a two-bedroom flat, according to new data released yesterday by the estate agent Asteco.

Asteco found that rents for mid-market properties in the same areas also increased by 4 per cent to reach between Dh135,000 and Dh185,000 a year for similarly sized apartments.

Rents for similar properties in investment areas also rose over the past three months with average rents for properties in Marina Square on Reem Island up by 5 per cent to reach between Dh135,000 and Dh150,000 for a two-bedroom flat.

Mid-market properties on Saadiyat Beach showed the highest increase over the period, with rents rocketing by 20 per cent over the period A two-bedroom apartment on Saadiyat Beach currently fetches between Dh175,000 and Dh185,000 a year.

Meanwhile annual rents for mid-market properties on Al Raha Beach were up by 4 per cent to reach between Dh135,000 and Dh165,000 for a two-bedroom flat and at Shams on Reem Island they rose 1 per cent to reach between Dh135,000 and Dh170,000.

For the top end of the market, what Asteco labelled prime properties, rents on Abu Dhabi island rose by 5 per cent over the quarter to an average of between Dh150,000 and Dh200,000 for a two-bedroom apartment while rents for similar properties in investment areas such as Raha Beach and Saadiyat Island rose by 1 per cent to reach between Dh140,000 and Dh200,000.

Rents for villas in many parts of the capital remained unchanged with yearly prices in seven of the 11 areas surveyed by Asteco remaining unchanged over the period. These include Al Raha Beach, where a three-bedroom villa fetches between Dh240,000 and Dh260,000 a year and Khalidiyah and Al Bateen where it costs between Dh160,000 and Dh190,000.

While affordable villas remain popular, rates at Al Reef Villas showed no further growth, having reached significant highs in previous months. The report added that this led to an overflow of demand for villas at Hydra Village, where rates rose 4 per cent in the second quarter.

Asteco said that apartment sale prices increased by an average of 4 per cent over the period as the number of sales in the capital slowed.

Sale prices in Al Muneera at Raha Beach rose the most, increasing by 6 per cent over the three months to reach between Dh1,300 and Dh1,500 per square foot. Apartment prices at Aldar’s recently completed The Gate development recorded the second highest growth, increasing by 5 per cent to between Dh1,400 and Dh1,550 per sq ft.

“At the moment we’re seeing a steady-as-she-goes scenario,” said Jerry Oates, Asteco’s general manager in Abu Dhabi. “Rents in Abu Dhabi sank steadily during the crisis and then increased rapidly after Abu Dhabi public sector workers were required to live in the capital in order to receive their housing allowance.

“Now what we are seeing is the market reaching stability. We are expecting that there could be a bit of a push to increase rents further in the latter part of the year but there will also be a lot of new stock coming on line then which could cancel that out.”

Asteco’s data slightly contradicts statistics published yesterday by the real estate data company Reidin, which found that average rents in Abu Dhabi fell by 1 per cent over the past three months while sales prices rose by 2 per cent.

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