Abu Dhabi - Mubasher: Abu Dhabi’s real estate market has continued to stagnate during 2017, with the majority of sale and lease activity driven by affordability and incentives being offered by landlords and developers, according to a report by Cluttons.
“We are seeing some positives emerge that may help to boost economic growth, including the recent announcement by ADNOC to invest $109 billion in its gas downstream growth strategy over the next 5 years,” said Faisal Durrani, the head of research at Cluttons.
“This will likely filter through to the UAE capital’s real estate market in the form of fresh demand for residential and commercial property,” he added.
Meanwhile, the head of Cluttons Abu Dhabi, Edward Carnegy said that “with household finances under pressure due to a reduction in housing allowances, the removal of various subsidies and the impending introduction of VAT in January 2018, tenants are focused on value for money, as well as quality”.
Cluttons says the rate of decline in rents across the city’s residential investment areas slowed to -1.8% in the third quarter of 2017, from -3.6% in Q2-17.
The annual rate of change has however slipped further to -11.8%.
In the sales market, Cluttons’ report indicated that residential capital values across Abu Dhabi’s freehold investment areas declined by 0.4% in Q3-17, at a level not seen since early 2014.
"Overall, house prices are now 4.1% below where they were at the same time last year," the report noted.
Cluttons previously forecasted rents to end 2017 between 8% and 10% down on 2016 across Abu Dhabi’s freehold residential investment areas.
“Rents are now expected to end the year 10% to 12% lower than the end of 2016. 2018 is likely to see rents slipping further in the region of 5% to 7%, unless there is a notable rebounding in economic growth, which would have to be underpinned by a turnaround in oil prices, which appears unlikely at this stage,” the report explained.
On the other hand, Cluttons’ expectation is for office rents to remain under pressure across Abu Dhabi during 2017 and 2018.
