Asteco: Abu Dhabi Report Q1 2011
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The road to home finance has been a long one for the Kingdom, but with its highly anticipated mortgage law edging ever closer to ratification, would-be homeowners and financial institutions are gearing up for a new era of opportunity.
With the announcement this year of a US$66.7 billion initiative to address the demand-supply imbalance in the Kingdom’s housing market, social infrastructure spend is topping the Government agenda as it focuses on building affordable homes for the future.
The South-East Asian island has seen a number of distinctive developments come to fruition over the past few years as the country further establishes itself.
Rents have continued the downward trend witnessed throughout 2010 with an average drop of 8% for apartments, 8% for villas and 5% for office space compared with the previous quarter.
Apartment rentals are expected to decline further throughout 2011, with a significant quantity of new supply entering the market, including the delayed first phases of Reem Island.
Sun & Sky Towers and Zone A at Marina Square have now received final approval from the relevant authorities, with the developers expected to start handover imminently.
In line with the previous quarter, average net effective rents for new office stock, particularly Grade B & C with inadequate parking, have seen a decline as securing good levels of occupancy takes precedence over high headline rents. The gap between original quoting headline rents and net effective deal rents is often significant.
In Al Ain, the residential market has seen further declines, mainly for smaller units as tenants upgrade in line with price reductions. New residential compounds are due for completion this quarter, which should lead to further rent reductions.
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