The recovery of Abu Dhabi's real estate market is nearly two years behind rival emirate Dubai and will not see any upturn until at least 2014, according to a report from real estate agent Jones Lang LaSalle (JLL).
“With an increase of 65 percent in the number of transactions in 2012, the Dubai real estate sector will continue to shift up a gear in 2013, experiencing a broader based recovery on the back of continued economic growth,” said Alan Robertson, CEO of JLL MENA.
Forecasts showed that the number of new residential and hotel units in the UAE capital will continue to rise in 2013, while a recent glut of office space coming onto the market in recent years will see the 2013 supply decline. Around 550,000 sqm of office space will come on stream this year, compared to 570,00 sqm in 2012.
By comparison 68,000 sqm of retail space is expected to come into the market, up from 42,200 sqm in 2012. This is a result of a lack of space handed over in 2012, while 2013 will see the launching of a number of large mall projects.
“2013 will see an increase in confidence and sentiment in the Dubai market generally. The market will experience a broader based recovery, with all sectors seeing some pockets of rental growth in 2013,” said Craig Plumb, Head of Research at JLL MENA.
“A number of major projects have been announced in Dubai recently, but these will take some time to come to fruition. In the meantime we would urge cautious optimism. Good projects with secure funding and tenant commitments will succeed, but we must avoid the over exuberance and over supply seen before the global financial crisis,” he added.
Launching JLL’s ‘2013 Top Trends for UAE Real Estate’ report, Robertson described Dubai and Abu Dhabi as “a tale of two cities”.
“Abu Dhabi remains 18 to 24 months behind Dubai and the market is not expected to experience an upturn in 2013. The foundations are however being laid for a recovery from 2014, with a number of major infrastructure projects scheduled to start later this year,” he said.
With Abu Dhabi launching AED330bn (US$89.9bn) worth of infrastructure and housing projects, all four major real estate sectors in the UAE capital are set to see growth.
JLL predicted 443,000 sqm of office space will be released in 2013, up from 340,000 sqm in 2012. In the residential sector, 16,000 new units are likely to benefit from a new policy requiring all Abu Dhabi government employees to live in the emirate.
The retail sector, which has seen a lack of high quality units in recent years, will see a massive surge, with 356,000 sqm of new space, up from just 62,800 in 2012.
Lastly, the hotel sector will also see 2,500 new rooms, up from 1,700 rooms last year.