Abu Dhabi - The latest quarterly report issued by the real estate consultancy arm of Abu Dhabi Islamic Bank (ADIB) - MPM Properties - highlights value growth across all sectors of Abu Dhabi's real estate marketduring 2014. Government initiatives to stimulate job growth and enhance market sentiment, fuelled in part by a knock on effect from the Expo 2020 win, provided healthy demand across all asset classes.
During the year the Abu Dhabi residential sector saw the launch of the first off-plan projects for over 6 years, with Aldar launching three projects (Hadeel, Ansam&Nareel) totaling approximately AED 5 billion, and comprising over 900 units. TDIC launched its first residential development within the Cultural District (Mamsha Al Saadiyat) comprising 461 units. All projects generated significant demand with all inventory released sold, and the expectation of new projects being launched during 2015.
Residential apartment values within the designated Investment Areas demonstrated strong capital appreciation during 2014. MPM Properties research shows capital value growth ranging from 11% to 35% with an overall average increase of 21.6%. Villa values also experienced strong growth ranging from 5% to 30%, with an overall average increase of 15%.
In the 4th quarter of the year the residential sales market witnessed a marked slowdown in transactions due to the widening gap betweenasking and offer prices, with sale prices showing no increases in the last 3 months. Data analysed by MPM shows that sales volumes during November and December of 2014 were at a 20 month low, impacted by the lower LTV ratio's introduced by the UAE Central Bank.
The Abu Dhabi market continues to be dominated by individual investors, with sale prices increasing faster than rents, eroding yields which have dampened investor demand. This trend will continue until sellers agree lower prices or rents rise to help investors achieve net yields within a range of 5.5% - 6%.
Meanwhile the residential leasing market saw significant activity during the course of 2014 following the removal of the rent cap in November 2013. Despite concerns of potentially huge rental increases, MPM Properties data shows that the market is self-regulating with normal market forces of supply and demand allowing rental rates to be negotiated and fixed. This is healthy for the long term growth of the sector.
In terms of the ADIB Rental Index, an increase of between 0% to 5%continued to be the common trend Q4 2014. During the 4thqaurterZones A, B and C witnessed average rental growth of 7.5% to 10% as residential units with water views or access to facilities and amenities within these zones were in high demand .
"The current market is effectively a three-tier market," said Paul Maisfield, MPM chief executive. "The mid-tier properties, which takes up most of our portfolio, are seeing a stability in rents with an average5% increase, reflecting the fact there is a ready supply of such properties and thus landlords are mindful not to push rents too high and risk occupancy levels falling."
"At the top end of the residential market there is a shortage in supply, and occupancy levels are high within the most popular developments and communities, and with the limited choice tenants now have rental increases of 15 to 20 per cent are common at lease renewal"
"At the bottom end of the market with the older properties there is also a shortage of supply which is pushing up rents and in percentage terms these have been hit the hardest."He added.
The key new projects during Q4 were Yas Mall (Retail), Burj Mohammed Bin Rashid Tower (Residential) and Courtyard by Marriott hotel (Hospitality). In 2015 we will see multiple residential and commercial projects being completed on Al Reem Island, Corniche, Danet Abu Dhabi and Capital Center.
MPM Properties expect the real estate market to continue to grow steadily during 2015 with anticipation that the market will witness the introduction of new real estate regulations. The launch of the Abu Dhabi Global Market Financial Free-zone; opening of The Louvre Museumand the ongoing infrastructure developments will help fuel demand for the residential and office sectors and support continued growth across the retail and hospitality sectors.
A copy of the full report can be obtained from://www.mpmproperties.ae/management.html
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About ADIB
ADIB is one of the largest retail banks in the UAE and its 600.000 customers benefit from a network of nearly 80 branches and 590 ATMs, as well as online, mobile and phone banking, providing them access to their accounts 24 hours a day. ADIB has been named as the UAE best bank in customer service for three years in a row by Ethos Consultancy and continues with its rich innovation track record in banking services that includes the award winning Ghina savings account, award winning co-branded cards with Etihad and Etisalat and a range of financing products. The bank has increased its asset base over the past 5 years and is continuing to build its presence internationally in countries such as Egypt, in which it has 70 branches, as well as KSA, UK, Sudan, Iraq and Qatar.
For media information, please visitwww.adib.aeor contact:
ADIB
Lamia Hariz
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© Press Release 2015
