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Abu Dhabi’s prime residential sales market saw high rates of growth, with an average annual increase of 25 per cent for the past two years, according to JLL’s Abu Dhabi Market Overview for the fourth quarter of last year. Following quarter-on-quarter growth since the first quarter of 2013, prime average residential sales prices remained stable during the fourth quarter last year and are expected to remain stable this year.
The report also noted that while demand has softened, annual supply has also reduced significantly. “Following two years of 25 per cent annual growth, average prime residential prices have remained flat for the first time since the first quarter of 2013, principally due to the recent decline in oil prices, equities markets and investor sentiment,” said David Dudley, Regional Director and Head of Abu Dhabi Office at JLL Middle East and North Africa.
“The residential rental market has also softened. While average prime resi dential rents increased by 4 per cent during the fourth quarter, rental growth is expected to reduce from double-digit annual growth to single-digit growth this year, due to the impact of an expected slowdown in government spending.”
In the residential rental market, average rents for prime residential units in Abu Dhabi have increased by 17 per cent in 2013 and 11 per cent last year, with 4 per cent growth recorded during the fourth quarter. This rental growth has been driven by major demand growth. With limited levels of new supply this has resulted in minimal vacancy rates within high-quality schemes. “Given a continual shortage of high-quality housing, we expect rental growth to continue, but at single-digit growth rates rather than the double-digit rates we saw in 2013 and last year,” said Dudley.
There were limited new completions of office space during the fourth quarter with the office vacancy rate remaining stable at 25 per cent. Following the market correction, prime office rents remained stable from the second quarter of 2012 to that of last year. “We have since seen 5 per cent quarterly growth over the past two quarters, signifying recovery of the office sector,” the report said. “As demand steadily improves and annual completions are reducing, the market-wide vacancy is now getting absorbed.”
In the retail sector, there remains a limited supply of high-quality malls relative to the spending power of the population, with the opening of Yas Mall in the fourth quarter being a welcome addition. Average retail rents and vacancy rates have remained stable during the fourth quarter. Meanwhile, about 2.8 million guests visited Abu Dhabi between January and October last year, an increase of 20 per cent above the same period in 2013.
Source: Special to Property Weekly