Today's Edition
A.SREENIVASA REDDY (ABU DHABI)
Abu Dhabi rents saw sharpest increase in over a decade, said Cushman & Wakefield in its Year to Date (YTD) 2024 Update on the city’s real estate market.
Rents for apartments rose 16% while villa rents saw an uptick of 10% so far this year, said the report by the real estate consultancy. Yas Island apartments witnessed the highest increase of 15% in rentals followed by Saadiyat Island at 14% and Reem Island at 12%. Villas in Saadiyat Island had a rental increase of 14% followed by Yas Acres with 13% and Al Reef Villas 8%.
“Areas like Yas Island are becoming more desirable for tenants, driving rental increases, while established luxury communities like Saadiyat Island are leading rental market growth,” says Prathyusha Gurrapu, Head of Research and Consultancy at Cushman & Wakefield Core.
Office rents have also seen a sharp rise as prime office spaces in Abu Dhabi witnessed a 15% year on year (YoY) increase. Occupancy levels reached a staggering 90% and 95%, the report noted. Abu Dhabi Global Market (ADGM) has been a primary driver of this upward trend. Prime office rents range between Dh1,950 and Dh2,600 per sq. m. annually, reflecting strong demand. Grade A office rents have risen to Dh1,600–1,900 per sq. m. annually.
Commenting on the demand for office spaces in Abu Dhabi, David Short, head of Abu Dhabi at Cushman & Wakefield Core, said: “The market is experiencing a clear mismatch between supply and demand, especially in the Prime and Grade A segments. With limited availability, prime office spaces are achieving exceptional performance, with occupancy rates nearing 95%.”
The financial sector’s boom is showing its impact on the demand for prime office spaces. “Abu Dhabi has seen a significant diversification in demand in the last few years, with new entrants stemming from the financial sector, particularly those requiring ADGM licences, in areas like Al Maryah and Reem Island,” says Short.
Abu Dhabi has seen a steady supply of residential units with a total of 2,431 units handed over to the owners so far this year, the report said. This included 1,315 apartments in Al Raha Beach, Al Maryah Island, and Masdar City, as well as 1,116 villas in Jubail Island, Yas Island, and Saadiyat Reserve.
An additional 1,950 units are anticipated for handover later this year, bringing the total for 2024 to approximately 4,300 units, with the majority of upcoming deliveries expected in Reem Island and Yas Island, the report said.
City-wide residential sales prices also saw a robust 9% YoY increase. The villa market continues to outperform the apartment market in terms of price increases, recording a 10% rise in villa sale prices, while apartment prices saw a more moderate increase of 8%, the report stated.
Apartments in Saadiyat Island commanded a significant 30% rise in prices highlighting a robust demand for luxury apartments, followed by Yas Island and Reem Island which experienced a notable increase of 17% and 9% respectively. Villas in Saadiyat Beach Villas witnessed a significant increase of 11%, followed by Yas Acres which witnessed an increase of 7%.
Although off-plan transactions still make up a significant portion of total volumes, there has been a shift in demand towards existing properties in YTD 2024, the Cushman & Wakefield report said.
“Ready property transactions increased by 54% compared to the same period in 2023, reflecting a growing share of end-user buyers seeking ready-to-move-in homes,” says Prathyusha Gurrapu. On the other hand, off-plan sales transactions saw a decrease of 19% YTD 2024 compared to the same period in 2023, she added.
The data furnished by the report shows that Aldar dominated the off-plan market accounting for 35% of the total transactions followed by Radiant Real Estate with 18% and Nine-Yards Real Estate with 11%. Aldar Properties led the secondary sales market as well with 40% of the total transactions, followed by Tamouh Investments at 9% and Manazel at 5%.
