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Abu Dhabi Real Estate Market Overview - Q4 2010

Q4 2010 highlights:

  • No major new supply has entered the office market. Several large-scale projects are expected to be delivered in 2011, which will increase office supply by more than 25%. While this will put further pressure on rents during 2011, it will be a positive step for the occupier market, allowing relocations to better quality space on competitive terms;

  • The residential market also did not see any major increase. While the market continues to experience an aggregate under-supply based on the number of households relative to units, average rentals have declined 5% to 10% during Q4. the lower to mid-market segments of the market remain significantly under-supplied;

  • New supply has entered the retail market in Q4 2010 with the full opening of Dalma Mall in Mussafah. The occupancy rates of more than 95% in high quality centres, indicates a shortage of quality space. Rental rates have remained stable over the past year in major malls, but asking rents have decreased significantly for upcoming malls outside Abu Dhabi Island;

  • Supply still outpaces demand in the hotel market. For the first time in more than 5 years, occupancies dropped 60% (year to Nov) causing significant declines in average daily rates.

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