Abu Dhabi: Abu Dhabi rents are slated to decline further in line with future additions to supply.
Yet, this sector is “becoming more competitive and moving further in favour of tenants, as a large number of high quality projects are delivered across all sectors”, Jones Lang LaSalle said in a report published on Tuesday.
The report revealed that there was a significant increase in supply at a time of weak demand and tight economic conditions which forced rents to fall in the aftermath of “unsustainable highs of the boom years”. “Q1 of 2012 may have only recorded a decline of 4 per cent in the prices of Abu Dhabi properties but during the Q2 and Q3, more than 9,000 more residential units will be added to the market which will cause more problems for Abu Dhabi property sector,” the report showed.
Market good for investors
Craig Plumb, director of research for Jones Lang LaSalle, told Gulf News in an interview that Abu Dhabi market is good for investors and realtors. “The threat of increasing supply and liquidity constraints will further push the market prices down. A number of residential, office, hotels and retail projects are in the pipeline this year. This will push rates down from sustainable highs,” clarified Plumb.
“The government of Abu Dhabi has introduced several policies and laws to protect investors. All these efforts have paid off and just as well reflected in the Jones Lang LaSalle Transparency Index report that has earned Abu Dhabi the second-highest spot in the Mena region after Dubai. This can significantly boost investors’ trust in the region,” according to the report.
David Dudley, Head of Abu Dhabi Office, Jones Lang LaSalle Mena, said: “Approximately 2,900 additional residential units were delivered in Abu Dhabi during Q2. Additions to supply included Rihan Heights in the Grand Mosque District, two towers on Marina Square, Amaya Towers on Shams and new villas in Bloom Gardens.”
Dudley added: “The majority of these units are in Rihan Heights and Bloom Gardens in the Grand Mosque District, Burooj Views and Marina Blue on Marina Square and Amaya Towers on Shams.”
“These deliveries bring the total residential stock to approximately 199,800 units at the end of Q2 2012. Up to 11,000 units are scheduled for completion in H2 2012 but it is expected that many of these projects will experience further delays at the final stages of approval,” said Dudley.
He clarified that approximately two-thirds of the upcoming supply comprises apartments, with the majority of the upcoming villa supply being within Emirati housing communities such as Al Falah and Watani.
According to the report, most of the supply for delivery in 2012 comprises additional units in master planned developments including Reem Island, Al Reef Villas, Danet, Saadiyat Island and Rawdhat. Upcoming supply also includes Nation Towers on the Corniche, Al Bateen Park and Marasy in Bateen.