Sunday, January 30, 2011

Abu Dhabi hopes to bridge gap with Dubai with new Reem Island units

Several high-rises in Abu Dhabi Reem Island are due for completion this year, and these could offer the much required breathing space to the under-supplied property market in Abu Dhabi.

These apartments, apart from being of superior quality, they are likely to be available for rental at a much lower rate than elsewhere in the city. If all works well, this could be the tipping point that the residential market of Abu Dhabi requires to bridge its gap with Dubai, where the rentals are far lower.

At present, the difference in rentals between Abu Dhabi and Dubai are nearly 20percent for apartments, in almost similar locations. This is, despite the fact, that rentals in Abu Dhabi fell by 16 to 30 percent in 2010, based on the location.

The wide rental gap is one of the main reasons that the professionals working in Abu Dhabi are making homes in Dubai. Dubai Marina has witnessed majority of such outflow, followed by the Greens Community. Further, the opening of the new Sheikh Zayed Bridge has reduced the commutation time, proving to be another temptation for professionals to choose Dubai as their home.

But, the real estate market, and the retail, health care and education sectors in Abu Dhabi cannot keep losing their residents to neighbours, particularly so, with the fresh series of recruitments being made by Abu Dhabi-based companies in financial services, and other industries, says media reports.

This is another reason for pinning hope on the new apartments at Reem Island. As these developments are likely to be the newest in the market, landlords will be keen to draw tenants. The rentals could be 10 to 25 percent lower than the average in the main island, said Simon Gray, Regional Head, Chesterton International.

According to report by Cluttons, the handover of several more units at Marina Square in Reem Island is yet to happen, but, once these units become tangible assets, a spell of increased activity is expected this year.

Apart from Reem Island, projects are nearing completion at the Corniche and Airport Road, with Etihad Tower and Landmark Tower due for release in second quarter of this year, and these developments will add 1200 new residential units to the market, said the Cluttons report.

It is evident that Abu Dhabi residents are adopting a ‘wait-and-watch’ approach on rental situation. It is hoped that by mid-year, they will see some apparent trends, based on which they could arrive at a decision.

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