Thursday, August 20, 2015

The Latest 2015 Abu Dhabi Real Estate Market Report

The second quarter of 2015 has gone past the window. We’re already more than halfway, and in just a little more than three months, we’ll be waving goodbye to yet another year. If you’re following the trend in the real estate market in Abu Dhabi, you might be waving goodbye with yet a smile on your face. So far, during the past two years, the real estate market in Abu Dhabi has experienced a noticeable upwards trend. Last year, sales growth in real estate has seen a double digit rate increase. Villa sales prices rose by 16% and apartments up 15%. Rent rates increased by 10%, and 9% for apartments, villas respectively. So how does this year stack up?

In the latest real estate performance reports, the second quarter of 2015 continues the trend that started more than 30 months ago. However, the growth of the real estate market seems to be stabilizing, with demand slowing down, mainly because of the government’s budgeting regulations due to the sluggish performance oil sector, UAE’s primary source of national income. In the short term, supply and demand will continue to remain above the line, but national spending and sentiment has to pick up the pace in order to sustain growth in this sector.

For the Residential Sales market, while prices have remained stable over 2015, there has been a step-down in the number of transactions. However, it’s not enough to deter developers in launching new products since they are still generally successful with them. Meanwhile, residential rentals have remained stable this quarter.

Office space demand remains stagnant, again due to the slowdown in the oil sector and government infrastructure investment. In spite of this, Grade A office rentals have remained stable due to minimal vacancies in quality projects. However, office completions in tow throughout the year are expected to increase the market-wide vacancy rate.

Retail rentals remains stable this quarter and this is expected to continue in the short-term. A number of Super Regional malls are set to enter the market on 2018, which will partly be supported by new population and tourism growth.

The Hospitality market witnessed solid growth in hotel guests above 2014 levels driven by wide ranging initiatives to grow the tourism sector. ADRs have also registered an increase of 4% in YT May compared to the same period in 2014. Hotel occupancies registered 77% in YT May reaching the same levels as 2014.


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