Reforms set to boost Abu Dhabi's real estate in the long-term
Performance across Abu Dhabi's real estate market remained relatively subdued over the last quarter. However, the launch of the first phase of the 'Tomorrow 2021' initiative is expected to result in a more positive investment environment in the longer term, according to JLL. According to the consultancy's Q3 report, one significant element of the initiative is to encourage startups to enter the market more efficiently, resulting in a boost in overall commercial activity in the long term. "With the reforms set to impact the real estate sector, the 'Tomorrow 2021' stimulus package will particularly focus on increased investment in the commercial market in the long term. Further aspects of the package will impact free zone businesses, allowing them to trade on shore. This will boost economic activity and therefore benefit the real estate market in the future," said Peter Stebbings, head of Abu Dhabi office - senior director valuation advisory, Mena, JLL. Apartment rents declined a further 2 percent (Q-o-Q). This translates into a 6 percent decline Y-o-Y. As more completions materialize towards the end of the year, residential vacancies are expected to increase, causing further rental declines. Similarly, the performance of the sales market continued to soften with average prices for prime villas recording a 2 percent decline in Q3 (14 percent Y-o-Y) and apartments recording a 3 percent decline (12 percent Y-o-Y). Approximately 832 residential units were delivered in Q3, bringing the total residential stock to approximately 255,000 units. Approximately 4,000 residential units are currently scheduled to enter the market by the end of 2018, mainly within Reem Island, Yas Island, and Al Raha Beach. However, a proportion of this supply could be delayed at the final stages of approvals and handover. The signs of recovering oil prices in Q3 may also have a positive impact on future office demand by increasing employment. Performance in the office sector remained stable over the past quarter with demand for space still limited and the overall stock remaining at approximately 3.7 million sqm gross leasable area. No deliveries took place in Q3. Deliveries in 2019 are expected to be less than 50,000sqm, as developers remain cautious due to subdued demand. Demand for office space remains limited, with some companies downsizing to smaller units.
Tags : INTERNATIONAL