'Abu Dhabi project completions at 10-year low'
Abu Dhabi supply completions are at a 10-year low due to cautious developers, tightened liquidity and more extensive regulations
Abu Dhabi supply completions are at a 10-year low due to cautious developers, tightened liquidity and more extensive regulations, a new report has revealed.
According to JLL's latest Abu Dhabi Real Estate Oveview report, this has led to smaller scale releases and developments being phased over time.
David Dudley, head of Abu Dhabi Office at JLL MENA, said: “For the residential rental market, while demand growth has reduced, this is offset by a major reduction in annual supply completions leading to relatively limited vacancy in high quality schemes.
"Annual supply completions historically averaged 10,000 units per annum – however current supply completions are at a fraction of that.”
"Many of the large scale development releases during the 2007 to 2008 upswing were over-sized and took a long time to be absorbed during the subsequent downturn.
"So having smaller digestible phases aligned to demand is a good thing, signifying a maturing and more sustainable real estate market."
Overall, Abu Dhabi's real estate markets have generally been stable during the first quarter of 2016 despite the continued impact of lower oil prices and a reduction in domestic government spending, the reported added.
While demand has reduced, supply completions have also reduced compared to previous years, leading to relatively stable market conditions.
Dudley added: "While the market has generally been stable, signs of caution remain - with a significant reduction in government domestic spending and a decline in transaction volumes and sentiment.
"We still expect demand growth to continue from projects commenced while oil prices were high, but job cuts and reduced investment will slow down demand growth.
"While there are some initial signs of government spending starting to return - particularly for mega tourism attractions - we expect caution to prevail."
The report said a total of 719 units were delivered in Abu Dhabi during the first quarter of 2016 bringing the total residential stock to approximately 246,000 units.
Approximately 4,000 units are expected to enter the market by the end of 2016 mainly within Danet Abu Dhabi, Reem Island and Saadiyat Island, JLL said.
It added that prime rents have remained stable this quarter -averaging AED163,000 per year for 2 bed apartments within investment areas - due to relatively low vacancy in quality schemes.
Sales prices have also remained stable at AED16,000 per sq m but the reduction in transaction volumes may put further pressure on prices this year, JLL said.