As a result, demand for larger office space decreased, while companies opted for small and medium office spaces.
Muroor showed the highest rental growth due to a large number of new offices being introduced in the market. The trend is likely to continue for Muroor and Defence Street as supply is set to continue for the next three to six months. Muroor showed an average growth rate of 11% in 2008 and is closely followed by Electra Street at 9%. Hamdan Street, Salam Street, Corniche and Khalidiyah grew by 8%.
According to Asteco’s 2008 Q4 rental report, residential rent increases remained almost at a standstill for two and three-bedroom units in Abu Dhabi. Salam Street, Passport Road, Muroor and Mussafah showed the highest residential rental activity. Mussafah and Muroor saw the introduction of new apartment units where rents are gaining upon prime areas such as Corniche and Khalidiyah.
One-bedroom apartments in the national capital continued to witness high demand, with tenants opting for these units mainly because of the high rents demanded for two and three-bedroom apartments.
Andrew Chambers, Managing Director of Asteco, said:
“Expatriates still view Abu Dhabi as an attractive option, fuelling demand for quality apartments. However, the prevailing financial climate has resulted in tightening of credit, which has affected property transactions across the UAE. The market is seeing the exit of short term investors who are unable to secure financing or those looking for quick returns.”
Villa rental rates in Abu Dhabi saw steady rental growth with the highest rental increases seen in Al Raha Gardens and Khalifa ‘A’ projects witnessing a 14 and 16% appreciation in rents over the last quarter for three-bedroom villas.
Villas continued to provide average rental rate yields of over 10% due to high demand, according to Chambers. Abu Dhabi’s average yearly rental rates for villas were at Dhs375,000, Dhs445,000 and Dhs535,000 for three, four and five-bedroom villas, respectively.
Al Ain’s residential market has seen an increase due to bulk renting of apartments by companies, which takes up new supply of both apartments and villas being introduced in the market. The demand is further increased by Abu Dhabi and Dubai residents renting villas in Al Ain and commuting to offices in the respective cities.
Apartment rental rates in Al Ain continued to increase but are still lower than villa rentals. A three-bedroom villa in Al Jimi commands an average annual rental rate of Dhs94,500 as against Dhs90,000 for apartments. The demand for apartments has increased due to limited supply of villas.
Compiled and updated quarterly since 2006, Asteco’s research reports include the survey and compilation of residential and commercial rental analysis for each emirate of the UAE.
Founded in Dubai in 1985, Asteco is the UAE’s largest property services company. Its services include retail, commercial and residential sales and leasing; strategic consultancy; property management and marketing; feasibility studies and valuations; and research and investment.
Wednesday, January 14- 2009 @ 11:00 UAE local time (GMT+4) Replication or redistribution in whole or in part is expressly prohibited without the prior written consent of Mediaquest FZ LLC.