Abu Dhabi H1 realty 
prices rise 17%: JLL

Around 1,750 units were completed in Abu Dhabi’s property investment zones Reem Island, Danet Abu Dhabi and Al Reef in the second quarter, says JLL, a leading real estate investment and advisory firm.

With the new deliveries the total stock reached about 240,000 residential units in the capital, the firm said in its Abu Dhabi Real Estate Overview for the second quarter of 2014.

Sales prices for residential units increased for a sixth successive quarter, with a seven per cent increase in the April-June quarter, bringing the average increase during the first half of 2014 to 17 per cent.

“The second quarter of 2014 continued to witness growth in the Abu Dhabi’s prime residential market,” said Craig Plumb, head of research at JLL Mena.

The Abu Dhabi market continues to be dominated by government-related investment with short-term demand being fuelled by investment and job growth from new major government backed construction projects, such as the airport expansion, Etihad Rail, Saadiyat Island museums and other major infrastructure, economic and social development initiatives. A sustainable recovery requires the government to continue to implement supply controls as many developers are now reviewing schemes that had been placed on hold following the market downturn.

“While new supply is needed — particularly of quality residential product — supply controls are required to ensure the right product is prioritised in locations with existing infrastructure,” he said.

Around 1,750 units were completed in Reem Island, Danet Abu Dhabi and Al Reef during the second quarter, bringing the total stock to around 240,000 units.

The recent removal of rent caps in Abu Dhabi has had a major impact on rents of secondary buildings as landlords have taken the opportunity to increase previously below-market rents more in line with current market levels. Rents for the office market remained unchanged in second quarter averaging Dh1,540 per sqm for Prime and Dh1,180 per sqm for secondary space. There were no major new deliveries in the office market this quarter, with the total stock remaining stable at 3.1 million sqm.

With additional 130,000sqm expected to enter the market during 2014, there will be continued downward pressure on rents for secondary space. The vacancy rate is currently at 30 per cent and is expected to increase as further deliveries take place in the next two years.

Retail stable

Average line store retail rents for malls on Abu Dhabi Island and for malls outside Abu Dhabi remained stable this quarter at Dh3,000 per sqm per annum and Dh1,820 per sqm per annum respectively.

Retail deliveries in the Nation Towers Galleria on the Corniche and Al Marasy retail component in Al Bateen, resulted in an additional 20,000 sqm of retail GLA in the period, bringing the total retail stock to approximately 2.2 million sqm GLA.

Over 400,000 sqm of retail GLA is expected to enter the market by the end of 2014, dominated by the delivery of Yas Mall on Yas Island.

The Yas Mall will significantly improve Abu Dhabi’s retail offer and will reduce the amount of retail spending that is currently lost to Dubai.

— haseeb@khaleejtimes.com