Abu Dhabi real estate market remains stable in Q3: JLL

In its third quarter report, international real estate investment and advisory firm JLL has said that the general trend for Abu Dhabi in the third quarter and, indeed, the first three quarters of this year has been stability, with value performance of most sectors remaining flat, and a slight increase in hospitality performance.

David Dudley, International Director and Head of Abu Dhabi Office at JLL MENA, said, “While the market has remained stable there are increased signs of caution — with a slow-down in government domestic spending and a reduction in transaction volumes and investor sentiment. In the second quarter we had reported that the market was at a tipping point with its future direction being dependent on the extent to which government maintained domestic spending in the current period of reduced oil prices.

“During the third quarter it has become clear that the level of domestic government spending will reduce in the short-term, as the government remains cautious and re-allocates funds to regional priorities. Job cuts have occurred in the oil and gas and government sectors and some of Abu Dhabi’s mega projects are expected to be delayed. On the positive side, supply remains under control.”

He also said that following a two year bull-run where residential price growth at 25 per cent per annum outstripped GDP growth of 3 per cent to 5 per cent per annum, a period of stabilisation is not a bad thing—allowing market dynamics to catch up with sentiment.

The UAE government has announced that it plans to cut spending by 4.2 per cent this year, following the decline in oil prices, the first such cut in spending for 13 years. “We still expect demand growth to continue, but at a slower pace,” said Dudley. “Demand growth will continue to be sustained from projects commenced while oil prices were high — with projects such as the airport and Etihad expansion having an economic multiplier effect — but there will be greater scrutiny of new projects, which will be phased outwards.”

Source: Property WeeklyPW


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