Abu Dhabi Rental Market Flooded

A new report from Asteco Property Management suggests the Abu Dhabi rental market may be poised to fracture along new and old properties as the market becomes flooded …

A new report from Asteco Property Management suggests the Abu Dhabi rental market may be poised to fracture along new and old properties as the market becomes flooded with newer units. The surge in construction is forcing down rental rates in the emirate city and experts believe the disparity between properties will cause a rate divide as more people seek value for their money. A requirement for city employees to live within the city limits to qualify for a housing credit is also expected to influence rental rates in 2013. For more on this continue reading the following article from Property Wire.

Thousands of new homes in Abu Dhabi are bringing down rental rates and the market is set to divide as people seek out newer properties rather than old stock, it is claimed.

The residential sub sectors are now becoming more clearly de?ned by qualitative factors with tenants seeking value for money, according to the latest analysis report from Asteco Property Management.

‘In 2013 we expect to see a widening segregation in rental rates between the popular new developments, which, with occupancy levels rising will be able to sustain rental levels and in some cases achieve growth, and the less popular older stock, that will continue to see rents come under downward pressure as landlords compete to maintain occupancy,’ said Paul Mais?eld, the firm’s associate director and general manager.

‘We estimate that approximately 15,000 new homes have been delivered to the Abu Dhabi market over the course of 2012, with a further 17,000 scheduled for completion in 2013. The introduction of this new supply has resulted in average rental levels declining across the market on average by 12% over the last 12 months,’ he explained.

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The report points out that when the new Investment Area developments initially entered the market during the ?rst half of 2012, rental rates declined  given the volume of availability. However, these  developments have generated good levels of demand, driven by residents upgrading to better quality accommodation, which consequently resulted in more stable rents, particularly over the last  three months. In some cases, the rental declines seen in the ?rst half of the year have been reversed as take up levels increased.

Maisfield also pointed out that the performance of the Abu Dhabi residential leasing market in 2013 will be strongly in?uenced by the impact of recent government announcements on demand.

The fact that government employees are required to reside in Abu Dhabi to qualify for housing allowances is likely to lead to increased demand at the high end of the market and the new Tawtheeq lease registration requirements and the government’s efforts to stamp out illegal sub division of villas will also affect demand.

Older lower quality buildings have seen their vacancy levels reduce over the last three months while villa developments offering good community facilities remained popular and achieved premiums compared to stand alone villas.


The report points out that there is a waiting list for apartments at the popular St Regis Residences on Saadiyat Island which is anticipated to become increasingly attractive to residents as a premier living destination with the Cranleigh School due to open in 2014 along with the New York University.

Also, with its prime position on the Corniche and lifestyle offering, Nation Towers is expected to become one of the most sought after addresses in the city after having secured a high level of pre-leasing activity.

There is currently a lack of good quality villa communities in Abu Dhabi and hence the existing villa developments will continue to prove popular, the report adds.

A large percentage of the upcoming new supply for 2013 will be located on Reem Island with the expected completion of approximately 5,900 units, comprising the Gate District and a number of stand alone towers on Shams Abu Dhabi.

This article was republished with permission from Property Wire.


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