By Staff writer
JLL says property prices and rents in UAE capital stabilised in Q2 following two years of significant rises
Property prices and rents in Abu Dhabi stabilised in the second quarter of 2015 following two years of significant rises, according to a new report by Jones Lang LaSalle (JLL).
Its Q2 Abu Dhabi Real Estate Overview report said the market was flat in the three months to the end of June with transactions falling due to a weaker sentiment among investors.
It said the Abu Dhabi market is currently at a "tipping point", with market stability very much dependent on the government continuing to invest in to major new infrastructure and economic development projects.
JLL said sales prices remained stable in Q2 following 25 percent annual growth during 2013 and 2014.
"While prices have been upheld, there has been continued downward pressure on transaction volumes due to a decline in sentiment," the report said, adding that about 6,000 new units are expected to enter the market by the end of 2015.
JLL said residential rents have remained stable during the quarter. While demand growth has softened, stock completions currently remain stable and vacancy rates remain minimal within quality schemes.
David Dudley, international director and head of Abu Dhabi Office at JLL MENA, said: "As we predicted earlier in the year, we are expecting single digit rental growth during 2015, following 17 percent growth in 2013 and 11 percent in 2014, as supply and demand become more balanced."
He added: "The general trend for Q2 and indeed the first half of 2015 has been stability, with performance of most sectors remaining flat, and a slight increase in hospitality performance.
"Following a two year bull-run we are currently going through a period of mid-cycle stabilisation. This is primarily driven by a slow-down in the pace of demand growth, but with short term supply completions under controlthe market conditions are stable.
"The softening of demand principally stems from the decline in oil prices, which has directly affected Abu Dhabi's dominant petro-chemicals sector, and also lead to a reduction in domestic government spending as the government re-prioritises its projects, and a decline in investor sentiment."
He said: "We still expect demand growth to continue, but at a slower pace... With an increasing cost of living and a reduction in demand, we are currently at a 'tipping point', with market stability very much dependent on the government continuing to invest in to major new infrastructure and economic development projects."For all the latest real estate news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.