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Abu Dhabi Real Estate Market Overview - Q1 2015

​The first quarter of 2015 recorded further growth in the residential rental and hospitality sectors while the residential sales, retail and office sectors remained stable. Following the decline in oil prices, we expect there to be a reduction in government spending this year which will slow down the pace of demand growth. On the other hand, the short-term supply picture is generally constrained leading to relatively stable market conditions.

Residential Rental growth continued at 4% during Q1 2015 (following 11% growth in 2014) – due to limited quality supply across all price points and the rent cap having been removed. The Residential Sales market remained stable (following 25% growth during 2014) due to a decline in investor sentiment following the reduction in oil prices.

The Office market remained stable following two successive quarters of recovery and growth – with demand remaining relatively flat and limited supply completions. Vacancy rates for office space are expected to remain stable this year given that a significant amount of the new supply in the pipeline is pre-committed.

Retail rents remained stable this quarter. There were no major supply completions in Q1 and completions in the rest of 2015 and 2016 are limited, although there are a number of super regional malls expected to enter the market in the medium term (post 2018).

The Hospitality market was the strongest performing sector this quarter, driven by wide-ranging government initiatives to boost tourism. While Dubai registered a slowdown in the hospitality market this quarter, Abu Dhabi saw an increase in hotel ADRs for the first time since 2010 (YT February up 12% from the previous year). Hotel occupancies registered 77% in YT February, up one percentage point from the same period in 2014.

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