Residential property prices in Abu Dhabi soared during the third quarter of 2013, due in part to an increase in the number of foreigners arriving to live in the emirate.
According to international property consultancy Cluttons, residential property prices in Abu Dhabi rose by 14.4 per cent over the same quarter of last year, hinting that the market is recovering after all but collapsing in 2012.
New rules regarding where people who work in the emirate may live along with an influx of foreigners moving from nearby Dubai due to the lower property prices in Abu Dhabi, have been given as two of the main reasons behind the increase in prices.
“Aside from the demand driven by the Federal Government’s decree, requiring all public sector workers working in Abu Dhabi to reside in the Emirate as of 1st September 2013, there is a trend in demand stemming from people relocating from Dubai. They are seeking more affordable rents and see this return as a preferable alternative to downgrading in Dubai,” explained Steve Morgan, head of Cluttons Middle East.
The bottoming out of the property market in late 2012 is also said to have sparked the hunt for good deals, which is contributing to the upward pressure on values.
Abu Dhabi’s letting market has also experienced a turn-around in the pace of rental value growth, with average rents rising by 1 per cent during the third quarter of 2013, following on from an increase of 4.5 per cent in the previous quarter.
“The buoyancy in the lettings market, although at a lower rate than that being recorded across the border in Dubai, still remains above the pace of household income growth, which suggests a period of more subdued growth may lie ahead,” explained Morgan. “Tenants are also remaining exceptionally cost conscious.”
The best performing freehold residential apartment assets were mid-range one-bedroom apartments on Al Raha Beach, where average rents rose by 9.7 per cent in the third quarter, leaving them at just over AED113,000 (approximately £ 18,997) per annum. This has become a much sought after location in recent months, particularly for tenants legally required to reside in the emirate because of its proximity to the Abu Dhabi–Dubai highway, Yas Island and Abu Dhabi International Airport.
Article published 27th November 2013