JLL: Abu Dhabi Real Estate Overview Q3 2011
Download Now
Latest News
The road to home finance has been a long one for the Kingdom, but with its highly anticipated mortgage law edging ever closer to ratification, would-be homeowners and financial institutions are gearing up for a new era of opportunity.
With the announcement this year of a US$66.7 billion initiative to address the demand-supply imbalance in the Kingdom’s housing market, social infrastructure spend is topping the Government agenda as it focuses on building affordable homes for the future.
The South-East Asian island has seen a number of distinctive developments come to fruition over the past few years as the country further establishes itself.
The Abu Dhabi Government is continuing to rationalise its projects and implement major restructuring plans in some of its most important entities, making it more responsive to market conditions.
While the UAE economy has continued to grow in real terms, it experienced tighter liquidity and a slow down of private sector economic activity in Q3, possibly as a result of global economic concerns related to debt issues in the United States and the Euro zone.
The Arab Spring has had a positive effect on the hotels market, with Abu Dhabi regarded as a safe haven in a more rurbulent regions. Continued political instability elsewhere in the MENA region may have a positive impact on the retail, residential and office sectors in Abu Dhabi in the future.
Abu Dhabi's supply pipeline will continue to generate over-supply for most asset classes. Average rents and sales prices continued to decline during Q3 2011 causing the market to become more tenant favourable.
Vacancies have increased in both the residential and office sectors over Q3 and will continue to do so in line with an increase in supply. However a possible future increase in transaction volumes due to more competitive rents, may help absorb this vacancy.
The softening of rents is decreasing the rent premium that abu Dhabi has maintained over Dubai in recent years, which may help draw commuters back to the capital, increasing demand for real estate accross all sectors.
Three major towers entered the office market during Q3. The more competitive market conditions have resulted in a move away from iconic to more practical office developments, as the commercial sector gets more serious.
Residential stock increased by approximately 2,800 units in Q3, mainly due to the delivery of Capital Plaza and phase one of Al Zeina on Raha beach. Residential rents continued to experience downward pressure as more supply comes on stream.
In the retail market, Mushrif mall was delivered adding a total of 56,000 sq m (GLA) to the stock, while other projects were delayed until Q4 2011. The market will move further in tenants favour in Q4 as several additional large retail projects are completed.
No new significant supply entered the hotel market in Q3. A number of major hotels are however anticipated for delivery in Q4 2011, which will enhance the capital's tourism offering, while further increasing competition.
Download Now
Your Comments
You must be logged in to add comments.