By Ed Attwood
Commercial supply stays static, hotel supply outstripping demand
All sectors of the real estate market in Abu Dhabi are seeing steadily lowering rents and prices, despite the under-supply affecting most areas of the sector, according to the latest data from Jones Lang LaSalle (JLL).
On the commercial front, the agency’s third quarter report said that as no major supply entered the market through the period, office vacancy rates remained the same at eight percent, with quoted rents also remaining the same.
However, JLL also said that it had seen evidence of firms looking to upsize their operations in the UAE capital, despite the attractions of nearby Dubai, which has an abundance of cheaper office space.
With regard to residential property, the research note said that despite the delivery of 3,000 new units in the quarter, the sector was seeing a mismatch between supply and demand.
There is significant under-supply for mid-market and affordable segments, while there is a risk of over-supply for high-end luxury property.
JLL said rents had declined slightly since the second quarter, which was matched in sales prices, with few transactions taking place.
Average apartment rentals have experienced a year-on-year decrease of 16 percent, although this has widened to as much as 30 percent year-on-year.
On the retail side, average rental rates have remained stable in the main Abu Dhabi malls since the third quarter in 2009.
JLL said that the severe undersupply in the market has left many retailers waiting for space in the top-quality malls that will be opened over the next two or three years.
“With the market currently undersupplied in terms of quality, many consumers are shopping in neighbouring Dubai, resulting in a loss of opportunity for the Abu Dhabi retail market,” the report stated.
With regard to hospitality, JLL said that recent supply additions had outpaced demand, but that the opening of new attractions such as Ferrari World would significantly enhance the UAE capital’s leisure offerings.