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Retail, office and hospitality markets remained relatively stable, according to JLL Real Estate Market Overview
Prudent moves by government to reduce spending and consolidate government entities in reaction to lower oil prices and tougher economic conditions continues to impact market performance.
Mergers and job cuts, combined with reduced government spending, have impacted the growth of employment, population and disposable incomes, leading to increased vacancy, downsizing and a short-term decline in residential rents and prices and retail spending. Office demand has also been affected by the consolidation of oil and gas, financial services and government sectors.
Within the hospitality market, while occupancy levels have remained stable, ADRs have increased marginally compared to the same period last year as the growth in tourism offsets the decline in corporate demand.
David Dudley, International Director and Head of Abu Dhabi Office at JLL MENA, commented: "Many of Abu Dhabi's government entities are going through a period of re-structuring in response to tougher economic conditions and prudent moves by government to reduce spending due to lower oil prices."
He added: "We expect some further decline in certain sub-sectors over the short term due to the current decline in demand growth and sentiment. However, on the positive side, annual supply completions remain much lower than previous years, mitigating the extent of rental decline, with rental rates and sales prices expected to remain above the levels that existed in 2012, prior to the 2013-2014 upswing."
"The recovery of Abu Dhabi's real estate market is heavily dependent on the return of government spending to drive economic growth and sentiment. We are hopeful of some positive announcements on the return of selective government spending coming through this year and the current consolidation efforts will help improve efficiency going forward.
"Medium to long term growth prospects remain highly positive as the government remains committed to the 2030 Vision – to establish a world class city offering, supported by major economic development initiatives to diversify the economy, improve transparency and attract new demand. Investment opportunities remain, particularly for existing income producing assets , and we continue to see keen interest from investors taking a longer term view on the future growth potential."
SECTOR SUMMARY HIGHLIGHTS – ABU DHABI:
David Dudley commented: "Abu Dhabi's medium term hospitality demand trends are very promising, as the government's various large-scale initiatives to grow tourism continue. These include the major new airport terminal, further expansion to Etihad Airways, the delivery of world-class attractions on Saadiyat Island and Yas Island, and the hosting of high profile international events."
International Director, Head of Abu Dhabi Office
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