Abu Dhabi real estate market in downturn stage
Jones Lang LaSalle's Q3 report said average rents would fall further
All sectors of the real estate market in Abu Dhabi are in the downturn stage, with average prices likely to fall further in coming quarters, according to a Q3 report by Jones Lang LaSalle.
Executives from the real estate consultancy, who regularly carry out reviews of this kind, said that oversupply was particularly prevalent in the office and upper-end residential markets.
It will be in Q4 however, when Abu Dhabi will really feel the pinch of oversupply, with a substantial amount of new property coming online in the next six months.
Again, according to the report, this will affect the office and high end residential markets mostly, but also the retail market, giving tenants in all three spaces more choice and power when it comes to rental negotiations.
“Looking ahead to Q4, we expect to see these general trends to continue,” the report states. “As new supply enters the market, landlords will become more flexible to maintain occupancy rates.”
At the same time, executives at the firm point out that there a big difference between the oversupply in Abu Dhabi and that in Dubai, and suggest that there continues to be undersupply in certain areas, such as the mid-market housing sector.
In an interview, head of research at the company Craig Plumb said: “It’s only been in the last year that there’s been a lot of new property coming on board in Abu Dhabi.
“Even now there’s not as much as there is in Dubai. The surplus will really show in Abu Dhabi in the future, but companies were a bit later starting construction in Abu Dhabi than they were in Dubai.
“Rents have started to fall in Abu Dhabi but haven’t fallen anything like as much as they have in Dubai.”
The hotel market, on the contrary, was cited in the report as having adjusted well to new levels of supply over the past year - especially with the completion of leisure attractions such as Ferrari World, which are expected to boost demand for hotels in the final quarter of the year.