The latest market report from Jones Lang LaSalle shows growth in prime residential real estate while government-backed projects are helping fuel the market
Jones Lang LaSalle (JLL) recently released its second quarter (Q2) Abu Dhabi Real Estate Overview report, which offers an insight into the latest trends in the capital’s office, residential, retail and hotel property markets.
Commenting on the report, Craig Plumb, Head of Research at JLL MENA, said: “The second quarter of 2014 continued to witness growth in the Abu Dhabi’s prime residential market and little change in the office, retail and hospitality sectors. 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.”
Highlights of the report specific to the residential sector included the completion of 1,750 units in Reem Island, Danet Abu Dhabi and Al Reef during Q2, which brings the capital’s total supply to around 240,000 units.
The removal of the rent cap continued to make its mark, with sales prices for residential units rising by seven per cent in Q2 as landlords try to raise prices in line with current market levels.
The report showed that sales of residential apartments are increasing 28 per cent year-on-year, with rental prices increasing 15 per cent. During Q2 alone, the average rent for a two-bedroom apartment rose by 3 per cent to AED 150,000. Meanwhile, sales prices for residential villas are increasing 27 per cent year-on-year, with rental prices only increasing six per cent.
Looking to the future, JLL reports an additional 7,000 residential units to be completed in the capital by the end of 2014 and another 7,000 in 2015, with an impressive 11,000 expected to come on line in 2016.
While JLL reported few changes to the office sector, the retail market is expected to receive a boost following the completion of Yas Mall and an additional 400,000m2 of gross leasable area. The addition of Yas Mall, the Aldar project that will make the real estate developer the largest owner and manager of retail space in Abu Dhabi, should reduce the retail spending lost to neighbouring Dubai.
The capital will also receive a boost in retail supply upon the completion of further developments in 2017 and 2018. These include Sowwah Central, Saadiyat Mall, Reem Mall and the planned extension for Marina Mall.
Meanwhile, the capital’s hotel market continues to grow as evidenced by the opening of Ramada and Southern Sun hotels in Q2. JLL also reported that the market is responding to a demand for hotel apartments, particularly in areas such as Yas Island, with further units expected at Capital Centre Arjaan, Adagio Al Bustan and Danat Residences over the coming 12 months.
For the full JLL report, visit: www.jll-mena.com
