The first quarter 2019 Abu Dhabi real estate review issued by leading local consulting firm ValuStrat – reports that Abu Dhabi’s residential capital values were 12.2% lower than last year and 3.2% than the previous quarter. Residential rents were also softer, 2.1% down over last 3 months.
Abu Dhabi’s declining residential capital values were 18.7% lower than the same period in 2017, 12.2% lower than last year and 3.2% below the previous quarter. The weighted average residential value this quarter was AED 10,150 per sq m (AED 943 per sq ft), apartments stood at AED 11,259 per sq m (AED 1,046 per sq ft), and villas at AED 7,513 per sq m (AED 698 per sq ft).
All ten locations monitored by the valuation-based ValuStrat Price Index (VPI) witnessed single-digit quarterly declines in capital values of less than 5%. Highest quarterly price falls were registered for villas in Al Raha and Hydra Village, 4.3% and 4.1% respectively. On an annual basis, most areas lost 12% in capital values, however, two locations were slightly less affected by the negative trend and they were apartments on Saadiyat Island and villas located in Mohamed Bin Zayed City, with capital values declining 9.3% and 7.1% respectively.
The Abu Dhabi VPI now also analyses residential rentals. The rental VPI is a 100-index with a base set for Q1 2016, it monitors five apartment and five villa locations within Abu Dhabi’s investment zones and compares similar units within those locations on a quarterly basis. The Q1 2019 residential rental VPI in Abu Dhabi stood at 77.2 points, declining 22.8% since 2016, softening 2.1% quarterly and 6.9% annually. Abu Dhabi’s gross yields averaged 7.1%, for apartments at 7.4% and villas with 6.5%. The average occupancy rate among a sample of 31,073 residential units stood at 77%.
“…Interestingly, as demand for affordable homes grows, asking sales prices for villas in Abu Dhabi saw a slight uptick of 1% when compared to the previous quarter, it remains to be seen if this trend continues over the coming quarters …” said Haider Tuaima, Head of Real Estate Research at ValuStrat.
As far as residential supply was concerned, a total of 4,292 homes were completed during 2018, 3,365 apartments and 927 villas. 3,357 apartments and 2,867 villas/townhouses are expected to be delivered during this year. Key expected deliveries this year include 2,315 villas on Yas Island, Al Reem Island with 2,177 apartments, Saadiyat Island with 763 apartments and 121 villas.
Office asking rents in primary commercial districts saw declines of 1.9% quarterly and 3.6% annually. The average citywide asking rent for offices sized between 93 sq m to 186 sq m (1,000 sq ft to 2,000 sq ft) stood at AED 904 per sq m (AED 84 per sq ft).
As of December 2018, Abu Dhabi City had a total stock of 29,271 keys within a mix of 138 different hospitality establishments. The average occupancy rate during 2018 remained relatively stable at 74%, which is an uptick of 0.4% from the previous year, however, the Average Room Rate (ARR) and Revenue Per Available Room (RevPAR) have continued to experience downward pressures and fell 4.4% and 4.0% YoY, respectively.
Declan King MRICS – Managing Director & Group Head Real Estate commented ‘… We are delighted to build our VPI stable of informed real estate data further, with the introduction of a rental index for Abu Dhabi. This provides all stake holders in the capital with trust worthy real time opinion on what is happening in the residential rental sector, as per our expert research team and RICS Registered Valuers…’
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About ValuStrat
ValuStrat is a leading consulting firm headquartered in Dubai providing Advisory, Valuations, Research, Industrial Consulting and Due Diligence services across a diverse range of industry sectors since 1977. Offices in the UAE, UK, Saudi Arabia and Qatar serve over 1,000 corporate clients in the Middle East. Client base includes financial institutions, local corporates, multinationals, governments, SMEs, family businesses and start-ups. Some of the key sectors serviced by ValuStrat’s consulting team include real estate, hospitality, healthcare, education, manufacturing, retail, entertainment, transport and FMCG. ValuStrat is a Royal Institution of Chartered Surveyors (RICS) Regulated Firm and the first company head quartered in all of MENA and Asia to be accepted into the prestigious RICS Tech Affiliate program.
About the ValuStrat Price Indices
The ValuStrat Price Index for Abu Dhabi’s residential capital values is a valuation-based index constructed to represent the quarterly price change experienced by typical residential units within Abu Dhabi City. The ValuStrat Price Index for Abu Dhabi’s residential rental values is constructed to represent the quarterly rental change experienced by typical residential units within Abu Dhabi City. The VPI applies weighted averages using data samples representing more than 90% of all property types across the city’s investment zones and is built by our expert RICS Registered Valuers.
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