On the first day of Cityscape Abu Dhabi 2012, Jones Lang LaSalle released its latest research report called ‘Abu Dhabi Real Estate Market Overview – Q1 2012’ covering the Abu Dhabi office, residential, retail and hospitality market segments.
Highlights of the report:
· Abu Dhabi’s real estate sector is becoming more competitive as a large number of high quality projects are delivered across all sectors.
· Significant increases in supply across all sectors during a time of weak demand and tight economic conditions is causing rents to correct from the unsustainable highs of the boom years. Rents are expected to decrease further in line with future additions to supply.
· International Tower at Capital Centre and three major towers on Sowwah Square entered the office market during Q1 2012 bringing the total office supply to approximately 2.7 million sq m. Office supply is scheduled to increase further this year.
· As the office sector is entering a period of over supply, vacancy rates have increased to approximately 30% and are expected to increase further as new supply comes on stream. There are limited deals at present and demand continues to be from tenants looking to upgrade from their current space. However, decreasing rents and better quality space has a highly positive impact on increasing demand for office space.
· Residential stock increased by 2,800 units over the quarter. Additions to supply were provided by Al Muneera and Al Zeina on Raha Beach, four towers on Marina Square, St. Regis on Saadiyat and apartments on Rawdhat.
· Rapid take up of residential developments such as the St. Regis apartments on Saadiyat Island demonstrate the latent demand in the market for high quality, well planned residential projects.
· The retail market remained steady in terms of both supply and performance in Q1 2012 but an estimated 271,800 sq m of retail GLA could be delivered to the market by the end of 2012.
· Given the spending power of the population and additional growth from increasing tourism, there remains significant latent demand for retail in the Abu Dhabi market, most of which is currently serviced by Dubai. The delivery of upcoming projects will help address some of this latent demand.
· Two hotels, Sofitel on the Corniche and Premier Inn at Capital Centre, opened in Q1 2012 adding 500 rooms to Abu Dhabi’s total hotel stock inventory.
· Despite record increases in visitor arrivals, due to the significant current and upcoming supply of hotel rooms there will continue to be additional downward pressure on Average Daily Rates (ADRs). However the recently announced government initiatives to boost leisure demand will help market conditions going forward.
