JLL report says gov't plan to stimulate demand in Abu Dhabi property sector expected to deliver positive results in the long run
Abu Dhabi's real estate market is expected to rebound in the long run following government initiatives announced in 2018 to stimulate demand and drive diversified economic growth, according to new research.
JLL's Abu Dhabi Q1 Real Estate Market Overview on Tuesday reported subdued conditions and relatively unchanged performance across most sectors in the UAE capital, adding that the goverment initiatives have "had little impact" so far.
The office market saw an increased number of enquiries in the first quarter of 2019 and is expected to stabilise by the end of the year, with limited expected declines in rent for Grade A space, JLL said.
“In the long run, demand for office space could be generated by the easing of regulations and the major stimulus package announced by the government last year. Demand could also come from private sector businesses following the new law formalising the public-private partnership program,” said Peter Stebbings, head of Abu Dhabi office, JLL.
“Overall we expect market sentiment to improve given these significant government initiatives launched to boost overall demand and to energise the market. However, the benefits of these measures will likely be seen overtime as industry players and investors continue to be cautious during current times of uncertainty,” he added.
JLL's report said that in the residential and retail sectors, occupancy levels remained largely unchanged with rents continuing to decline due to subdued market sentiment and limited demand.
These marketplace conditions also led to declined residential sale prices, affected by the continued reduction in transaction volumes.
The hospitality market registered a significant increase in average daily rates at 19 percent to reach $138 in Q1, attributed mainly to a number of high profile events allowing hotels to capitalise on an increase in visitors to the capital.
Occupancy levels remained stable at 79 percent in the year to February compared to the same period last year. With limited levels of new room supply expected in 2019 and 2020, the hotel sector could begin to recover ahead of other sectors of the market from 2020 onwards, JLL noted.