Abu Dhabi property market 'more competitive'
Abu Dhabi, October 16, 2011
The Abu Dhabi property market has become more competitive in terms of rental pricing and availability of quality product during the third quarter, according to a report by real estate expert Jones Lang LaSalle (JLL).
JLL Mena said in its latest report that despite handover delays with some projects, higher completion levels were now filtering through and were providing more options for tenants in both the office and residential sectors of the Abu Dhabi market.
While a number of residential projects have remained delayed at handover stage, additional supply continued to enter the market during the third quarter with a further 2,800 units delivered, JLL said in its latest review covering the office, residential, retail and hospitality sectors.
This trend is expected to continue as scheduled handovers increase significantly in the fourth quarter, the JLL Mena said.
With the current residential stock of 193,000 units rising to more than 246,000 units by end of 2013, the Abu Dhabi’s residential market will continue to be favourable for both buyers and renters, the expert said.
Over the past year, increased supply and vacancies in new good quality buildings resulted in rent declines of around 10 per cent for prime two-bedroom apartment units and more than 30 per cent for lower quality units.
David Dudley, head of Abu Dhabi office, JLL Mena said, 'Although the Abu Dhabi government has taken measures to limit the future supply pipeline, significant new supply has been delivered in the office, residential and retail sectors during the third quarter as projects reach completion.'
'With increased vacancies and downward rental pressure, tenants across different sectors are now able to upgrade to new and better quality properties without incurring additional costs,' he added.
The improving cost competitiveness, supported by the further implementation of market friendly government initiatives will have a positive impact on the Abu Dhabi real estate market by triggering further demand.
While the steps’ being made by Abu Dhabi government to consolidate projects and government entities and re-prioritise investment is having a short-term negative impact on the market, these moves are highly positive for the medium term market outlook, said Dudley.
'The market is taking a short-term hit for longer term benefit,' he added.
In the office sector, Grade A office stock across Abu Dhabi increased by 55,000 sq m to almost 2.4 million sq m in the third quarter.
With vacancies increasing to around 20 per cent and up to 150,000 sq m of additional stock scheduled to enter the market in the next quarter, further downward rental pressure is expected in both the Grade A and B office sectors, said the JLL report.
The UAE capital has become more competitive for tenants over the quarter, with a narrowing of the gap between commercial rents in Abu Dhabi and Dubai, the report stated.
This scenario and the expanding choice of high quality space available will have a positive impact on demand as more tenants will look to upgrade their space without increasing costs, it added.-TradeArabia News Service