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JLL, the world's leading real estate investment and advisory firm, today released its third quarter (Q3 2015) Abu Dhabi Real Estate Overview report that assesses the latest trends in the office, residential, retail and hospitality sectors.
David Dudley, International Director and Head of Abu Dhabi Office at JLL MENA, commented: "The general trend for Q3 and indeed the first three quarters of 2015 has been stability, with value performance of most sectors remaining flat, and a slight increase in hospitality performance.
"While the market has remained relatively stable there are increased signs of caution – with a slow-down in government domestic spending and a reduction in transaction volumes and investor sentiment.
"In Q2 we had reported that the market was at a 'tipping point' with its future direction being dependent on the extent to which government maintained domestic spending in the current period of reduced oil prices.. During Q3 it has become clear that the level of domestic government spending will reduce in the short-term, as the government remains cautious and re-allocates funds to regional priorities. Job cuts have occurred in the oil and gas and government sectors and some of Abu Dhabi's mega projects are expected to be delayed further and phased over a longer timeframe. On the positive side however, supply remains under control."
He commented: "Following a two year bull-run where residential price growth at 25% per annum outstripped GDP growth of 3% to 5% per annum, a period of stabilization is not a bad thing – allowing market dynamics to catch up with sentiment.
The UAE government announced that it plans to cut spending by 4.2% this year, following the decline in oil prices, the first such cut in spending for 13 years and all indications are that this trend will continue. "We still expect demand growth to continue, but at a slower pace. Demand growth will continue to be sustained from projects commenced while oil prices were high – with projects such as the airport and Etihad expansion having an economic multiplier effect – but there will be greater scrutiny of new projects, which will be phased outwards.
SECTOR SUMMARY HIGHLIGHTS
Abu Dhabi Prime Rental Clock
This diagram illustrates where JLL estimates each prime market is within its individual rental cycle at the end of the relevant quarter.
*Hotel clock reflects the movement of RevPAR.
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