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The Abu Dhabi real estate market has witnessed continued stability across all market sectors, including office, residential, retail and hospitality, according to the latest report by Jones Lang LaSalle, a global real estate investment and advisory firm.
The report, which covers the fourth quarter (Q4) 2013 of the Abu Dhabi market, noted an average of six per cent increase in sales prices in the prime residential sector during this period. This marks an annual growth of 25 per cent during 2013 due to improved investor outlook and projections of further price and rental growth.
Meanwhile, the prime residential rental market has increased by an average of eight per cent during Q4 2013, leading to an annual growth of 17 per cent during 2013 to reach Dh140,000 for a prime two-bedroom apartment.
''Demand is driven by price, and there are a number of factors driving rental growth. [These include] job growth, reduced commuting from Dubai, and the removal of the five per cent rent cap,'' David Dudley, regional director and head of Abu Dhabi office at Jones Lang LaSalle, Middle East and North Africa, said.
Dudley added: ''The removal of the rent cap will lead to further rental increases during 2014 as the industry transitions from a significant proportion of the market being on capped rents to entirely market-driven pricing.''
He said market forces would ultimately determine rental prices.
As for the hotel sector, it is approaching recovery, with new completions marking their way. Occupancies have increased to 67 per cent during the first 11 months of 2013, which has been the highest level since 2008.
The report also discussed a number of major completions in the office market this quarter, including Capital Tower, the World Trade Centre and the Landmark Tower. Despite 140,000 square metres of new office supply, vacancy rate increased from 38 per cent to 39 per cent, reflecting improved market absorption of the new supply.
Dudley expected further growth this year and described the outlook for the market on the medium term as positive.
''The short to medium-term market outlook remains positive, driven primarily by major government-backed construction and infrastructure projects such as the airport expansion, transport improvements and leisure attractions.''
''However, a long-term sustainable market recovery remains dependent on further government initiatives to diversify the economy and generate new, long-term sustainable employment growth,'' Dudley said.
He added that such recovery will also depend on the government continuing to implement further supply controls to ensure the real estate market remains balanced in the future.
Source: Sarah Diaa, Staff Reporter, gulfnews.com