Asteco: Abu Dhabi Focus Q3 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.
Apartment rents have fallen on average by 6% compared with last quarter as shown in the Real Estate Monitor. This represents a small reduction in the rate of decline witnessed over the preceding three quarters.
Villa rents have remained relatively static in the popular villa communities in contrast with off-island private villas, which continue to fall (by an average of 5%).
The most significant new supply delivered to the market this quarter is Al Zeina at Raha Beach, comprising 952 apartments, 26 penthouses, 119 townhouses and 124 villas.
Aldar has announced a rent-to-own scheme on unsold homes at Al Zeina and Al Bandar. Tenants will pay a fixed rent for two years with 100% of the first year’s rent and 90% of the second year’s rent converted to equity towards a purchase at a preset price. Details on rents and sale prices have not been announced as at the date of this report.
Despite Tamouh receiving completion certificates for Zone A in March 2011, there continues to be delay and uncertainty in respect of handover timescales to individual investors in Zones B, C and D.
Strong rental demand is driven by existing residents’ desire to upgrade and secure better value for money accommodation.
Grade A fitted offices can now be secured for rents in the region of AED 1,850 per square metre + service charge, with shell and core space averaging around AED 1,500 per square metre + service charge.
Some landlords are retaining quoting rents for Grade B and C space at unrealistically high levels and are consequently suffering from poor occupancy levels.
The sales market is still characterised by low sale volumes. However, as expected, enquiries are growing in line with the delivery of completed projects.
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