Jones Lang LaSalle publishes Q3 2012 Abu Dhabi Real Estate Market Overview report
While completions were limited in Q3 2012, the Abu Dhabi real estate market remains tenant favourable for most asset classes.
There were no significant additions to the office market over the past quarter with the total office stock remaining at approximately 2.7 million sq m. Significant new supply is due for delivery in Q4 2012, which will push down average rents, particularly for secondary quality assets, but in turns this will also drive occupier relocations improving, take-up rates.
The residential market continued to see sale price and rent declines. Since the market peak in 2008, the average prime rent for a two bedroom apartments in Abu Dhabi has fallen in excess of 48%.
The Executive Council has announced a new regulation requiring all employees of the Abu Dhabi Government and its affiliated entities to live within the Emirate. This regulation, which is planned to take affect from late 2013 could strengthen the negotiating position of landlords and help stabilise rentals in the residential market.
No additional retail malls were completed in Q3, with the opening of several centres delayed until H1 2013. An estimated 200,000 sq m of retail GLA could be delivered to the market by mid-2013. Rents in prime retail malls on Abu Dhabi Island have remained unchanged over the past quarter.
Given the spending power of the local population and additional growth from increasing tourism, there remains significant demand for retail space in the Abu Dhabi market, some of which is currently serviced by Dubai. The delivery of upcoming projects will help address this unmet demand.
No new supply entered the hotel market in Q3 2012, but a number of major hotels are anticipated for delivery in Q4 2012. This will put additional downward pressure on Average Daily Rates (ADRs) and hotel occupancy rates.
Commenting on the Q3 2012 reports, Craig Plumb, Head of Research for Jones Lang LaSalle in MENA notes that: “While the Dubai market is certainly starting to recover, this improvement remains largely focussed on a limited number of high quality assets / locations, and has yet to trickle down to the overall market where rents and values have remained largely unchanged during 2012. The overall market still faces challenges of high new supply and limited demand for secondary assets, that is providing tenants and occupiers with significant choices.”
