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Following Dubai, where rental prices in some areas have decreased significantly, prices in the lease segment of the UAE capital Abu Dhabi impeded its growth. According to the analysis of Dubai real estate market by CBRE, rental prices in Abu Dhabi showed an average increase of just 1% in the second quarter.
Rentals in the central, well developed areas, such as Al Reef, increased more significantly — by 3% in the last three months, mainly as a result of supply limiting. And the annual average rentals rate in Abu Dhabi is still 10% higher than last year's value. The average cost of renting two-bedroom apartments in the heart of Abu Dhabi today is between US$ 23,000 and US $ 28,500 per year.
Office rental market in Abu Dhabi also stagnated in the second quarter, while prices remained unchanged. The reason for this, according to CBRE analysts, is that demand in this segment is determined by the government and oil companies, which have recently suffered losses in profits due to lowered oil prices. Premium office rentals also remained at the same level — about US $ 450 – 600 per square meter of office space per year, and lower class secondary offices in Abu Dhabi cost now an average of US $ 300 per square meter per year.
Despite the fact, that Abu Dhabi real estate market will get 34, 000 new units in the next three years, making a total of over 1.45 million square meters, CBRE head of research Matthew Green believes that it is not enough to meet demand, even provided that some of its decline is caused by the fall in oil prices. “The market situation is softened by the relatively constrained development pipeline. Around 34,000 new residential units will be completed up to 2018, notably down on the five-year average and a similarly tight pipeline also exists for new Grade A office supply”, he said.
