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Mon 26 Jan 2015 01:34 PM

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Abu Dhabi house prices flat for first time in nearly 2 years

New Jones Lang LaSalle report shows no increase in prices in Q4 - for the first time since Q1 2013

Abu Dhabi house prices flat for first time in nearly 2 years
Skyscrapers stand on the skyline viewed from the Central Market in Abu Dhabi, United Arab Emirates, on Wednesday, Jan. 11, 2012. Abu Dhabi, the oil-rich sheikhdom that spent 36 billion Dirhams ($9.8 billion) bailing out its biggest developer in 2011, will probably reach for its checkbook again as property companies in the United Arab Emirates face a stalled market and deadlines to repay debt. (Credit: Bloomberg News)

Residential real estate prices remained flat in Abu Dhabi during the fourth quarter of 2014, the first time no increase has been registered since Q1 2013, according to Jones Lang LaSalle.

Its Abu Dhabi Real Estate Overview report for Q4 said the subdued market was down principallly to the recent decline in oil prices, equities markets and investor sentiment.

The report said the UAE capital's sales market is expected to remain stable during 2015 amid softerning demand and reduced supply of new homes following high rates of growth, averaging 25 percent, for both 2013 and 2014.

David Dudley, regional director and head of Abu Dhabi Office at JLL, Middle East & North Africa, said that "the stabilisation of sales prices signifies that some of the excessive heat has now been removed from the market".

He added: "We do not however anticipate a significant decline in prime residential prices due to the relative shortage of availability of quality product."

Abu Dhabi's rental market saw average rents for prime residential units increase by 11 percent during 2014, with 4 percent growth recorded during Q4, JLL's report said.

It added that this rental growth has been driven by new job creation as the government progresses major infrastructure and economic development projects combined with government policies to reduce the level of commuting from Dubai.

Dudley said: "While we expect there to be a reduction in government spending this year due to the recent decline in oil prices, we expect employment creation and residential demand growth to be sustained from projects commenced while the oil price was high.

"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 2014."

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