Abu Dhabi: Abu Dhabi’s real estate markets remain in over-supply, with additional new supply still in the pipeline leading to further increases to market-wide vacancy rates, property advisory firm Jones Lang LaSalle said in its latest report on the emirate.
“There continues to be a significant distinction between high grade and low grade product - while the prime market is showing signs of stability and early recovery, the performance of lower grade stock continues to decline,” the report says.
It added: “During Q2 2013, prime residential rents remained stable, following 8 per cent growth during the first quarter. The overall office market remains over-supplied, pending further progress with government economic development initiatives to diversify the economy and generate new jobs. However, prime office rents have started to stabilize, with prime office rents having remained stable the last four quarters.”
Jones Lang LaSalle said while hotel occupancy levels increased by 8 per cent during the first five months of 2013, the average daily rates have continued to remain under pressure, declining by 2 per cent.
Commenting on the report, David Dudley, Regional Director and Head of Abu Dhabi Office — Jones Lang LaSalle, Mena told Gulf News: The first half of 2013 has been encouraging for the recovery of Abu Dhabi’s real estate markets. Prime office and residential rents have stabilised. Retail and hospitality sectors saw improved performance, and prime residential prices continued to rise during Q2 2013.”
“We expect this trend to continue over the remainder of the year, with further stabilisation of prime markets and two-tier performance between high and low grade property,” said Dudley.
He said over the short to medium term, Jones lang LaSalle sees positive growth in the hospitality sector as the government continues to build a highly compelling visitor destination. “The residential sector will also improve as the government’s wide-ranging economic development, social development and infrastructure investment initiatives generate job growth. In turn, further growth of the residential population and tourism base will further grow retail spending power,” said Dudley.
He noted: “The extent to which this recovery is sustainable in to the medium term depends on the extent to which demand growth and employment growth outpaces further additions to supply. A key trend over the first half of this year has been developers ‘dusting off’ schemes that were put on hold following the market downturn; sustainable market recovery is very much dependent on there being a healthy balance between supply and demand.”
