Abu Dhabi: Average prices for prime residence in Abu Dhabi remained flat during the fourth quarter of 2014, with the stability marking a first following two years where annual growth was at 25 per cent, according to the latest Jones Lang LaSalle (JLL) report.
Released on Monday by the real estate advisory firm, the report said that the market did not see an increase as a result of falling oil prices, which negatively impacted investor sentiment and stock markets.
Prime average residential sales prices are also expected to remain stable during 2015, the report said, adding that both demand and supply have dropped.
“While average prime residential rents increased by 4 per cent during [the fourth quarter of] 2014, rental growth is expected to reduce from double-digit annual growth to single-digit growth this year, due to the impact of an expected slowdown in government spending,” said David Dudley, regional director and head of Abu Dhabi office at JLL.
Average rents for prime residence went up 11 per cent during 2014, with increased demand as a result of job creation.
Meanwhile, Abu Dhabi’s office market continued its recovery, with prime office rents rising 5 per cent on a quarterly basis. According to the report, there were limited new completions of office space during the fourth quarter of 2014, with the office vacancy rate remaining stable at 25 per cent.
As demand improves and annual completions drop, the market-wide vacancy is getting absorbed.
Looking into the retail market, there is currently a limited supply of high quality malls relative to consumers’ spending power. Average retail rents and vacancy rates remained stable during the last quarter of 2014.
“The future outlook for retail is positive as consumer demand continues to increase from population, employment and tourism growth. However there is substantial supply in the pipeline including several super regional malls, which will cause the market to become highly competitive from 2017 onwards,” Dudley said.
He added that there is, however, shortage in neighbourhood and convenience retail options.
Discussing expectations for market performance, Dudley said that the medium-term outlook was positive as a result of multiple government-backed projects.
