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Dubai: According to Asteco’s latest market update, rents in Abu Dhabi’s mid-market and affordable residential areas were little changed in the 12 months to September, while even in upscale areas, increases were limited to a few percentage point.
One-bedroom rentals in slightly older buildings average Dh35,000-Dh45,000 in areas such as Al Khalidiya and Al Bateen, and Dh42,00-Dh45,000 in central Abu Dhabi.
Heading to Khalifa City and MBZ City, then the average price of a one-bedroom is Dh32,000-Dh42,000.
Expanding your search for high-end properties, the average price of a one-bedroom on the Corniche is Dh60,000-Dh70,000. But it’s worth noting that Abu Dhabi’s wider residential rental market has been experiencing near-static rates, while Dubai’s average rent has risen by more than 20% and Sharjah’s new/existing rental contracts are experiencing around 5-8% of recovery.
Abu Dhabi has been seeing continued interest from buyers in off-the-plan projects such as Bloom Living developments. In the next three to five years, there is likely to be a major shift in end-user buying interest in the UAE.
Abu Dhabi has not seen a large influx of newly constructed buildings, which is why rents have remained stable. Asteco expects to complete 5,100 apartments in the first half of 2022 and 1,000 in the July-September phase. For the quarter, an increase of 2,350 units is expected.
In fact, “rents for several low-quality buildings located on the main island of Abu Dhabi declined slightly,” Asteco reported. “This is mainly due to the increase in relocations from the city to areas where significant new supply has been delivered and handed over over the years, including Al Reem Island.”
How do rents on Al Reem stack up?
The latest listings show prices for one-bedroom apartments on Al Reem Island start from Dh47,000, with many priced between Dh50,000-Dh52,000. But the new super-premium buildings even have the same format and cost over AED 70,000. Similar upscale buildings in Saadiyat Beach or Yas Island also have single beds, with average prices ranging from Dh70,000-Dh80,000 and Dh65,000-Dh75,000 respectively.
“While average apartment rents have remained largely unchanged over the past three months, there has been a significant increase in rents across a range of prime and prime developments in Asteco,” the report added.
Regardless, the AED10 billion Jubail Island is a massive project that has been recording project and sales milestones.
The same happened in Dubai last year, when the first rent increase in 5 years started in the Palm, Downtown and DIFC areas before quickly permeating Dubai Marina, Business Bay and JLT.
Keep an eye out for job-creation trends
Whether Abu Dhabi’s mid-to-high-end market areas will also witness such rent increases will largely depend on the addition of new jobs and new residents. New hiring in the energy and financial services industries will be key to determining whether rents will move out of the constant state. If it does, how fast will it be.
Currently, as the Asteco report cites, relocations continue to occur as residents make the most of current rental trends. Next year will see more buildings delivered, which will also absorb most of them.
Likewise, we will compare what the Dubai property market has witnessed since the beginning of 2021, when relocations were gaining momentum. At the time, tenants were looking to move to larger locations, preferably those that offered ample green and living space possibilities. Once this phase stabilizes, there will be high demand in the mid-to-high-end market areas such as JVC, Arjan, parts of Dubailand and Midriff. It was around this time that rents also started to rise sharply.
make these decisions quickly
Tenants in Abu Dhabi are still considering whether they should move or renew and need to make these decisions quickly. Market dynamics for rental space can change quickly.
Off-plan launches in Abu Dhabi
Off-the-plan launches pay off for Abu Dhabi developers In Abu Dhabi, Aldar pushes for more off-the-plan launches – in places like Saadiyat and Yas – from Bloom Holdings (with Bloom Living) and Q Properties (Reem Hills) ) and other companies’ projects have received strong interest from buyers. There’s also the massive Jubail Island, which has reached major project and sales milestones.
“Residential sales market activity continued to remain strong in the third quarter of 2022, with high demand for new off-plan villa projects as well as completed villas, especially in developed communities,” Asteco reported in its latest update. “The villa sales market has performed exceptionally well over the past 12 months. The prime villa communities, mainly located in Saadiyat and Yas Island, grew by 3-8% in the third quarter of 2022 and 10% compared to the same period last year above.”
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