Middle East Turmoil Boosts Abu Dhabi Home Sales

Middle East Turmoil Boosts Abu Dhabi Home Sales

Residential News » Middle East and Africa Residential News Edition | By WPJ Staff | July 22, 2013 9:20 PM ET

Political instability in the Middle East is helping home sales in Abu Dhabi.

The average asking price for a home in an investment area is up to AED11,500 per square meter ($3,130), a 5 percent increase from the first quarter of 2013, Jones Lang LaSalle reports. While still 33 percent below the AED17,222 a square meter developers were charging in the fourth quarter of 2009, the prices in prime areas are up 12 percent from the end of 2012, the consultancy reports.

"These increases are restricted to prime buildings within investment areas and do not represent a market-wide recovery," JLL reports.

Both Abu Dhabi and Dubai are benefitting from a perception of the UAE as a relatively "safe haven" for regional investors, the firm said. The Abu Dhabi housing market is also aided by new government spending initiatives and the decision by many long time locals to buy instead of rent.

To many market observers the market has hit bottom and "investors are looking to capture price growth from a potential future upswing," according to Jones Lang LaSalle.

"Abu Dhabi's real estate sector remains heavily reliant on the Government investing revenue surpluses into infrastructure and economic development initiatives to generate growth in population, jobs, tourism and spending and therefore demand for real estate," JLL concludes.

Meanwhile, rental rates remained unchanged in the quarter due to "strong demand and a relatively restricted supply of high quality units," JLL reports.

Abu Dhabi was once one of the most expensive rental markets in the world. But as more projects have been completed, average rental rates for a two bedroom apartment have fallen from AED230,000 a year in the fourth quarter of 2008 to AED130,000 at the end of the second quarter of 2013.

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