Despite the mixed performance of the residential market in the first half of the year, the industrial sector has been the city’s brightest star, with rents holding steady for the last three quarters. This has been underpinned by robust demand for industrial space and a genuine lack of surplus stock to upset the delicate supply-demand equilibrium.
Edward Carnergy, head of Cluttons Abu Dhabi noted: “We are encouraged by on-going activity in Abu Dhabi’s industrial market. KIZAD is developing into a regional manufacturing hub and remains the nucleus of overall industrial activity in the emirate, with international logistics firms vying for a presence in the UAE’s largest free zone. The announcement of a 100-sq. km expansion earlier this year is expected to drive growth in the sector for years to come.”
The report states that average prime office rents slipped by AED 50 psm to AED 1,800 psm at the end of the second quarter, 10% down on last summer. Similarly, secondary rents (AED 900 psm) are 25% lower than the summer of 2016, while office rents for more tertiary space have registered a 19% fall in the last 12 months and currently stand at an average of AED 650 psm.
Durrani said: “We expect to see rent corrections in the office market of between 5% to 10%, across the board, by the end of 2017 and the market’s performance will remain hinged on the ability of the economy to shake off the drag generated by the low oil price environment. Looking ahead, while stability in rents is expected this year, should the economic weakness persist into 2018, headline rents are likely to begin dipping slightly.”
Dubai
Cluttons’ latest report indicates that values across Dubai’s residential investment areas continued to moderate during Q2 2017, dipping by an average of 1.5%. This leaves the annual rate of change at -5.8% and marks the 12th consecutive quarter of price declines, during which time prices have moderated by 14%. Apartments continue to fare better than villas, with prices decreasing by an average of 1% during Q2, compared to a 2.2% drop in villa values.
Although prices have continued to fall, soft correction in the market appears to be nearing an end, with many locations starting to show signs of bottoming out, as previously reported by Cluttons. In fact, during the first six months of 2017, just seven of the 32 submarkets tracked in the emirate registered price falls, with all other locations seeing no change in values.
