By Staff writer
New JLL report says demand still strong in UAE capital due to a current shortage of quality housing
Abu Dhabi rents are expected to grow at single-digit rates during the remainder of 2015 due to a current shortage of quality housing, JLL said on Tuesday.
Its Q1 2015 Abu Dhabi Real Estate Overview report said rental growth in the UAE capital would not be able to match the double-digit rates seen from 2013 to 2014.
Rental growth for prime residential units continued at 4 percent during Q1, following 11 percent growth in 2014 and 17 percent in 2013, said the real estate consultancy.
Although no major deliveries took place during the first quarter of 2015, approximately 5,000 residential units are expected to enter the market by the end of 2015, JLL said.
Sales prices for Abu Dhabi residential apartments and villas have remained stable during the first quarter with average prices of about AED16,000 per square metres, JLL said in the report.
David Dudley, regional director and head of the Abu Dhabi office at JLL MENA, said: "We expect there to be a reduction in government spending this year due to the recent decline in oil prices - which will slow down the annual demand growth rate.
"We expect this to be a slowdown in annual growth rather than the government putting the brakes on - employment creation and residential demand growth will continue to be sustained from projects commenced while oil prices were high.
"Given a current shortage of quality housing, we expect rental growth to continue, but at single-digit growth rates, rather than the double-digit rates we saw from 2013 to 2014. While the residential rental market is linked to the overall supply-demand balance, the sales market is driven more by sentiment and consequently is more sensitive to the recent decline in oil prices and equities markets.
"After two years of 25 percent annual growth, average prime residential prices have remained flat since Q4 2014 - principally due to the recent decline in oil prices, equities markets and investor sentiment."