Abu Dhabi Real Estate Market Overview Report – Q1 2018
Q1 saw a further decline in residential and retail performance due to the continued reduction in sentiment and the increased cost of living. Hospitality ADRs have continued to decline due to the increased supply, however occupancy levels increased. While headline rents in prime office projects remained relatively stable, the office sector has moved further in favor of occupiers.
Residential rents and sales prices have been declining due to subdued demand and increased supply. Rental demand has been negatively impacted by job losses and cuts in housing allowances leading to greater vacancy. Market sentiment, and consequently transaction volumes, continues to remain low largely due to the unsettling outlook in terms of oil price and global economic recovery.
Office rents have remained relatively stable in Q1, although demand remains weak, as a result of reduced business growth, low oil prices, and consolidations. The delivery of additional supply at a time of weak demand as well as corporate restructuring are expected to place further downward pressure on rents over the next 12 months particularly within secondary buildings.
The retail market has been supported by the absence of further new supply, however due to the softening in market conditions, mall operators are increasingly offering extensive leasing incentives to attract and even maintain retailers.
The hospitality market registered a 6% increase in occupancy levels and a 16% drop in ADRs compared to the same period last year. Consequently, RevPar declined by 12% in YT February 2018 compared to the same period last year.
Q1 has also seen the announcement of a Joint Venture between Aldar and Emaar. The entrance of one of Dubai’s leading developers should boost market confidence with its identification of a major opportunity in the Emirate.
There has been continued progress at Zayed City and the more recently announced Riyadh City, which indicate the return of government spending, historically a strong catalyst for the Abu Dhabi real estate market.
Craig has over 20 years’ experience providing clients with quality advice on real estate market conditions in the UK, Asia Pacific and the Middle East. With a background in urban economics and spatial planning, he has particular expertise in the areas of property market research, development consultancy, transport related infrastructure projects and corporate real estate.
Since moving to the UAE in 2006, Craig has authored over 50 research reports on different aspects of the MENA real estate market. He has also provided market research and consulting services to major investor, developer and government clients and has appeared as an independent real estate expert before the Dubai International Arbitration Centre (DIAC).
Craig holds a Bachelor of Arts in Economics & Geography from Lancaster University and an M.Phil in Environmental Planning from Reading University (UK).