Wednesday, Apr 17, 2013
Abu Dhabi
Secondary office and residential products in Abu Dhabi continue to experience rental deflation. a research by CBRE, a global property advisory services firm has shown.
The CBRE report, which was released yesterday during the ongoing realty exhibition ‘Cityscape Abu Dhabi’ in the capital said although the first quarter of 2013 has seen steady economic progress, no positive movement has been recorded within either the office or residential markets.
“Prime office rents within Abu Dhabi’s premium developments have remained flat at Dh1,600-1,900/m²/annum. In contrast to the broadly stable prime office rents, secondary office products are suffering from significant rental deflation with a drop of around 3 per cent recorded over the previous quarter. Secondary office rents now typically range between Dh675-1,250/m²/annum,” said the report.
As regards the residential market, CBRE said average annual rents for two-bedroom and three-bedroom apartments in the city centre range between Dh50,000-120,000 per unit per annum and Dh70,000-150,000 per unit per annum, respectively.
“The relatively stable supply picture in the city centre has helped to maintain comparatively strong rents and occupancy rates, despite declines across similar products in other locations. Overall, average residential rents across the capital slid by around 3 per cent from previous quarter,” said the report.
Matthew Green, Head of Research UAE, CBRE Middle East told Gulf News in an email there are signs that stability will soon be returning to the emirate.
“The prime market has already shown some initial signs of improvement, with a number of premium apartment properties recording isolated growth in recent quarters. With 17,000 residential new units set to be delivered over the course of 2013, any imminent recovery will certainly be fragmented, with areas of oversupply taking longer to return to growth, he added.
Green said with close to 0.7 million square metres of new stock set to be completed this year, there is likely to be a further slide in rents over the course of the year as vacancy rates continue to rise.
“However, despite issues in the wider market, prime offices are now seeing some renewed interest, driven principally by international corporates. With the US economy showing signs of an improvement and a Eurozone crisis averted for now, a number of stalled space requirements are now being revisited,” he added.
The CBRE report noted that the Abu Dhabi Executive Council has announced plans to invest around Dh30 billion over the next five years to help stimulate activity, not only in the capital, but throughout the emirates.
“The 5-year development plan is intended to expand socio-economic infrastructure and create around 5,000 new jobs. The commitment to sustained expenditure on physical and soft infrastructure in Abu Dhabi remains the main driver for the local property market,” it added.
By Himendra Mohan Kumar Staff Reporter
Gulf News 2013. All rights reserved.
