Dubai: Abu Dhabi’s mid-market and affordable residential areas have seen hardly any change in rentals in the 12 months to September, while even in the upmarket locations, increases have been confined to a few percentage points, according to the new market update from Asteco.
In areas such as Al Khalidiya and Al Bateen, a one-bedroom lease in a slightly older building would average Dh35,000-Dh45,000, while over in central Abu Dhabi areas, it would be Dh42,00-Dh45,000.
Head off to Khalifa City and MBZ City, then a one-bedroom average would be Dh32,000-Dh42,000.
Widen the search for top-end properties, then a one-bedroom on the Corniche would average out at Dh60,000-Dh70,000. But what’s remarkable is the near static rates Abu Dhabi’s wider residential leasing market has been experiencing, while average rent increases in Dubai have topped the 20 per cent mark and Sharjah is experiencing around 5-8 per cent upturns on new/existing rental contracts.
It’s not as if Abu Dhabi has seen a massive inflow of newly completed buildings, which is why rents are holding steady. Asteco projects that 5,100 apartments were completed in first-half 2022 and 1,000 in the July to September phase. For the current quarter, the expectations are for an additional 2,350 units.
In fact, “there have been marginal rental rate declines for several lower-quality buildings located on the Abu Dhabi main island,” says the Asteco report. “This is predominantly due to the increase in relocations from the city to areas that have seen the delivery and handover of a significant amount of new supply over the years, including Al Reem Island.”
How does Al Reem Island rentals stack up?
Latest listings show one-bedroom apartments on offer at Al Reem Island from Dh47,000, with many showing Dh50,000-Dh52,000. But new super-premium buildings even have the same format for well over Dh70,000. Similar upmarket buildings at Saadiyat Beach or Yas Island also have one-beds averaging Dh70,000-Dh80,000 and Dh65,000-Dh75,000, respectively.
“Whilst average apartment rental rates remained more or less unchanged over the last three months, Asteco recorded marked rental growth for a selection of prime and high-quality developments,” the report adds.
Much the same had happened in Dubai last year, when the first rent gains in 5 years started off at the Palm, Downtown and DIFC areas, before shortly filtering towards Dubai Marina, Business Bay and JLT.
Watch out for job creation trends
Whether upper-mid- and mid-market areas in Abu Dhabi too will bear witness to such rent gains will depend a lot on new jobs and new residents being added. New recruitments in the energy and financial services sectors will be key to determine whether rents will shed their no-change status. And if it does, how soon will that be.
For now, as the Asteco report cites, the relocations continue to happen as residents make full use of the current rental trends. Next year will see more buildings delivered and that too would absorb much of that.
Again, comparisons are drawn to what Dubai property market witnessed since early 2021, which was when the great relocation momentum kicked in. At the time, tenants wanted to move into bigger locations, preferably those offering ample green and living space possibilities. Once that phase stabilised, the upper-to-mid-market districts such as JVC, Arjan, parts of Dubailand, and Midriff recorded substantial demand. It was at this time the rents too started make significant gains.
Make those decisions fast
Abu Dhabi tenants still mulling over whether they should shift or renew need to make those decisions fast. Market dynamics could soon change in the rental space.
“Residential sales market activity continued on strong footing in Q3-2022 with high levels of demand for new offplan villa projects, as well as completed villas, particularly within well-developed communities,” Asteco reports in its latest update. “The villa sales market performed exceptionally well over last 12 months. High quality villa communities, predominantly located on Saadiyat and Yas Island, recorded increases of 3-8 per cent in Q3-2022, and over 10 per cent compared with the same period last year.”
