Abu Dhabi Real Estate Sector Continues to Become More Competitive for Tenants

by Susan Smith

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Abu Dhabi properties are continuously performing quite well from past some time as compared to Dubai real estate sector. The ailing real estate sector of Dubai is still facing a downward trend even after every possible effort by the authorities. However, Abu Dhabi is showing the signs of stability.

A report by a renowned real estate agency states that in the second half of 2011, the rental prices and availability of quality properties have remained competitive in Abu Dhabi. The reason of competitive market in Abu Dhabi is because of higher completion of projects, which has increased the confidence level of investors.

Till now, 2,800 residential units are delivered in Abu Dhabi and about 11,000 units are expected to enter the market in the last quarter of 2011. According to another report, the number of properties to be delivered till 2013 will exceed 286,000 units. Now with increase in supply, tenants of residential, office and retail sector will have more options. Wide array of options have made the tenants to look for high quality properties in more posh communities. Currently, the total stock of units is 193,000, and with scheduled deliveries of other properties, the Abu Dhabi real estate market is expected to remain favorable for both renters and buyers.

Last year, the oversupply of properties caused the rents of good quality units to fall up to 10% while the rents for low quality units fell up to 30%. To stop the price fall, Abu Dhabi government has taken various steps. One of the steps was to limit the supply in future and allow the rental prices to stabilize. Government initiatives have caused tenants from other emirates including Dubai, to shift to Abu Dhabi. Now tenants are able to shift to good quality properties with improved amenities without incurring more investment.

This trend towards high quality properties is changing the perspective of tenants. In future, tenants will happily pay more rent for the amenities they are getting. Analysts and experts are of the view that the demand of Abu Dhabi properties will increase in near future due to the cost competitiveness and government’s friendly initiatives. Although, the government’s initiative to limit the supply of properties will have a negative impact on short term investment but on medium to long term investment, government’s moves will prove to be highly positive.

Short-term profits however, feel lucrative to everyone but in long term, that planning turns to be a poor planning. Government is trying to improve the long-term future of Abu Dhabi real estate market which can benefit every investor.

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taylor martin October 31, 2011 at 1:47 pm

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