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Abu Dhabi Real Estate Market Overview - Q2 2011

Q2 2011 Highlights:

  • Two major towers entered the office market: Tower One Sowwah Square and Guardian Tower at Danet. Significant new supply is due for delivery in 2011, which will push down average rents, particularly for secondary quality assets, but will also drive occupier relocations improving take-up rates.

  • Up to 14,000 residential units - primarily high end - will be handed over in Abu Dubai. This will improve options for high income residents, a historically underserviced sector. Meanwhile, lower grade properties will face increasing vacancies and steeper rent declines.

  • Abu Dhabi's retail rents are expected to soften as new supply enters the market during 2011-2012. Over the next two years, the completion of new super-regional malls will start to weaken the prevalence of shoppers commuting from the capital to Dubai. The future performance of individual malls will depend on several factors like quality of tenant mix, parking provision, location, and management quality and mall design.

  • Although no new supply entered the hotel market in Q2, a number of major hotels are anticipated for delivery in H2 2011, which will put additional downward pressure on ADRs and hotel occupancy rates. In YTD April 2011, average room rates fell 20% compared to the same period in 2010.

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