The supply of new homes in the capital, which fell to a seven-year low in the first quarter, has helped landlords to increase rents slightly, according to a new report. During the three months to the end of March, 61 per cent of lease renewals saw a modest rise, 38 per cent were agreed at a zero per cent increase, and only 1 per cent had rents reduced, the report by MPM Properties, the real estate advisory arm of Abu Dhabi Islamic Bank (ADIB), showed.”We are seeing a shift in market dynamics as the first quarter of this year has seen a constrained new supply of homes coming into the market with the residential market expected to see less than 2 per cent housing stock growth in 2016 versus an average of 4.5 per cent a year over the last seven years,” said Paul Maisfield, the chief executive of MPM Properties.”The slowdown in new supply will counter some of the downward pressure on rents, although a marginal correction is expected in the months ahead.”Around 1,000 new homes entered the Abu Dhabi market during the first quarter comprising small to medium sized developments in Al Nahyan, Muroor Road and Mohammed Bin Zayed City. ADIB’s real estate market data and rental indices are collated from transactions within its portfolio of over 23,500 units under MPM Properties’ management.A report from Cluttons showed that as companies in the capital were reducing housing allowances for staff, demand for high-end apartments was softening. The consultancy also said that there was a shortage of affordable homes.Cluttons said that some landlords had recognised the issue and were beginning either to lower rents or offer greater flexibility in payment terms, with some now accepting quarterly cheques. MPM said a similar trend was being offered by developers to home buyers as transaction volumes stayed low during the first quarter. To offset the slower appetite, MPM said developers were offering attractive payment plans on off plan residential sales to boost demand.In the office space, which is mostly led by the public sector, corporations have cut spending and put expansion on hold. MPM Properties predicts around 350,000 square metres of new office space to be added by the end of 2016. The majority of offices will be at City of Lights on Reem Island, with the remaining floors at Addax Tower being handed over in this quarter, and in Omega Tower which is due to be completed later in the year.Meanwhile, the hospitality sector added around 210 hotel rooms during the first quarter. Prominent projects that are due this year include the Four Seasons, Marriott, Grand Millennium Bab Al Qasr Hotel, and the Emirates Pearl hotel. selgazzar@thenational.ae
Source : thenational.ae
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