Abu Dhabi home prices and rents edge higher in the third quarter

The Abu Dhabi Government removed a rent cap in November 2013 which had restricted landlords to increasing rents for existing tenants to 5 per cent. Mona Al-Marzooqi / The National

Abu Dhabi house prices and rents inched higher during the third quarter of the year, property brokers reported.

Rents in Abu Dhabi increased by an average of 2 per cent in the three months to the end of September 2014, the property broker CBRE said yesterday as landlords who had pushed up historically low rents when the rent cap was removed a year ago reduced their expectations.

CBRE said that average rents in Abu Dhabi had risen 12 per cent between January and June after the government removed a rent cap in November 2013 which had restricted landlords to increasing rents for existing tenants to 5 per cent.

At the same time CBRE reported that sales prices in the capital were on the increase, rising 3 per cent in the three months to the end of September, having risen just 4 per cent in total during the previous two quarters.

“We attribute the slowdown in rent increases to the fact that there was a big jump during the earlier part of the year when landlords were given the ability to set their own rents. Now we are just seeing a normalisation of the market,” said Matthew Green, the head of research at CBRE’s Dubai office.

“For the sales market, on the other hand, we are seeing a growth in confidence across the market especially as we have seen a few new launches.”

CBRE, which collects its information from its own property management and valuations teams as well as discussions with other agents and Reidin data, said that the headline figures masked variations in performance in the city.

It said that rents for average high end two-bedroom apartments on the island of Abu Dhabi rose 4 per cent to between Dh140,000 and Dh195,000 a year during the three months to the end of September, while similar properties off the island rose up 3 per cent to between Dh70,000 and Dh95,000.

Meanwhile average annual rents for a four-bedroom villa on Abu Dhabi Island remained flat at Dh190,000 to Dh350,000 while rents for similar villas in off-island locations rose 1 per cent and are currently being rented between Dh140,000 and Dh180,000.

But rents for older, poor quality stock across the island continued to fall, the agent said as families upgraded to better quality buildings.

Last week its rival broker JLL reported that housing rents had stabilised in the capital during the third quarter with rents for prime two-bedroom apartments averaging Dh150,000 a year.

CBRE added that sales prices for typical properties in investment areas rose 3 per cent to between Dh13,725 and Dh17,760 per square metre.

This was surpassed by new launches during the quarter, such as TDIC’s new development in the Saadiyat Island Cultural Quarter, where prices stood at Dh21,500 per square metre and Aldar’s Gate Towers penthouses, which fetched Dh17,200 per sq metre.

However, prices for more affordable schemes such as Hydra Village and Al Reef remained unchanged

“While the third quarter produced a relatively subdued performance, improvements in both lease and sales rates are likely to continue, albeit at a more steady pace than was evident during the first half of the year,” said Mr Green.

“The third quarter is traditionally the time in which families move to Abu Dhabi because they want to have moved into their accommodation before the new school year starts,” said Ben Crompton, managing partner at the Abu Dhabi-based estate agent Crompton Partners.

“We are especially seeing strong demand in areas close to good schools such as Saadiyat Island and Al Raha Gardens.”

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