2023-08-14 21:02:52
Abu Dhabi (Al Ittihad)
The real estate market report for the second quarter of 2023, issued by the Asteco Real Estate Services Company, revealed that about 1,400 apartments have been added to the balance of residential apartments in Abu Dhabi during the second quarter of 2023, and 2,200 apartments and an additional 850 villas are expected to be delivered by the end of the year.
The report said, “While the new supply is distributed across most international investment areas, the bulk of the supply has been delivered within Al Reem Island and Saadiyat Island,” stressing that there are many new projects in the planning and design stage, and they are expected to be officially announced later in the year 2023. and early 2024.
A number of new projects were launched for sale in the second quarter of 2023, including projects in Marjan Al Saadiyat, The Source on Saadiyat Island, and Jubail Island Phase III.
As for the rental market, the demand for apartments and villas is still high, as rental prices increased within rates ranging between 2% and 5% during the second quarter of 2023. The main villa complexes are still the most popular, specifically the properties located on Saadiyat and Yas islands, with Rental increase of 10% compared to the same period last year. Medium and low quality real estate projects remained relatively stable with nominal changes in rental prices. However, the stock of lower quality real estate continues to face pressure from the growing number of options resulting from oversupply.
Demand for office space continued to be strong – particularly in the A/B+ category due to interest from existing companies expanding their presence or entering the Abu Dhabi market.
Strong transaction volumes were recorded in the second quarter as sales activity (for completed and under construction real estate projects) reached with a significant proportion of this demand coming from the end user segment. Sales prices of completed apartment projects also proved relatively stable during the second quarter, with an average annual increase of 1%.
The average villa sales price in Abu Dhabi increased by nearly 2% during the second quarter. However, well-established luxury villa compounds continue to outperform, with some compounds achieving sales price growth of close to 6%.
Projects under construction, particularly the prime and high-quality projects located on Saadiyat and Yas Island, were also very popular, with prices ranging between 1,500 and 3,800 dirhams per square foot.
In Dubai, Asteco indicated the delivery of approximately 11,000 housing units in the second quarter of 2023, with the majority of this balance (9,400 units) being apartments. While villa supply slowed somewhat during the quarter, it is expected to pick up during the second half of 2023 and the pace of supply to pick up thereafter with close to 20,000 completions planned for 2024/25. Despite continued demand from existing tenants and newcomers, the market is not immune to changes in real estate dynamics, including at the micro level. For example, some areas such as Meydan (with the addition of Azizi Riviera), Arabian Ranches 3 and Al Furjan have seen nominal rent growth due to increased supply. Conversely, low unit availability and limited tenant movement in popular communities such as Dubai Silicon Oasis (Sidre Villas), Oasis Villas, Layan Villas, Jumeirah Beach Residence and Greens/Views resulted in above average increases. Average rent prices for apartments, villas, and offices increased by 6%, 3%, and 6%, respectively, during the quarter, and 21%, 23%, and 25% annually. The upward pressure continues unabated across all asset classes. However, the pace of increase has slowed within some communities and asset classes, particularly within the villa sector. Tenant demand continues to grow and the number of choices in the high-quality, hybrid and co-working space market continues to grow, particularly for Class A spaces.
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