Abu Dhabi property prices continued to fall during the first six months of 2017 as the local economy struggled to shake off the drag generated by the low oil price environment, according to a new report.
Cluttons’ 5th annual UAE Property Market report said that residential values in Abu Dhabi’s main residential investment areas dropped by 0.9 percent on average.
The seemingly slower rate of decline has improved the annual fall to 6.3 percent in the 12 months to the end of June, from 7.5 percent at the end of Q1.
Cluttons said apartments posted larger corrections in the six months to the end of June of 1.4 percent, compared to just -0.3 percent for villas.
Despite the mixed performance of the residential market in the first half of the year, the industrial sector has been the city’s brightest star, with rents holding steady for the last three quarters, Cluttons added.
This has been underpinned by robust demand for industrial space and a genuine lack of surplus stock to upset the delicate supply-demand equilibrium.
Edward Carnergy, head of Cluttons Abu Dhabi, said: “We are encouraged by on-going activity in Abu Dhabi’s industrial market. KIZAD is developing into a regional manufacturing hub and remains the nucleus of overall industrial activity in the emirate, with international logistics firms vying for a presence in the UAE’s largest free zone. The announcement of a 100 sq km expansion earlier this year is expected to drive growth in the sector for years to come.”
The report also said that average prime office rents slipped 10 percent compared to on last summer. Similarly, secondary rents are 25 percent lower than the summer of 2016, while office rents for more tertiary space have registered a 19 percent fall in the last 12 months.
Faisal Durrani, head of research at Cluttons said: “We expect to see rent corrections in the office market of between 5-10 percent, across the board, by the end of 2017 and the market’s performance will remain hinged on the ability of the economy to shake off the drag generated by the low oil price environment.
"Looking ahead, while stability in rents is expected this year, should the economic weakness persist into 2018, headline rents are likely to begin dipping slightly.”
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