Was the Forecast for the 2015 Real Estate Market Correct?

The real estate market in Abu Dhabi has experienced an optimistic recovery from the worldwide economic downturn. For the past two years, the reports have yielded positive numbers, indicating a maturing health in the Abu Dhabi real estate sector. Last year, sales growth in real estate has seen a double digit rate increase. Villa sales prices rose by 16% and apartments up 15%. Rent rates increased by 10%, and 9% for apartments, villas respectively—a trend expected to continue until 2015.

Were they right?

In the latest real estate performance reports, the second quarter of 2015 saw an encore performance across all asset classes, although it wasn’t a repeat. The growth of demand has slowed down this year due to the sluggish performance oil sector, UAE’s primary trade commodity. This has lead to a reduction in government spending and sentiment, which affected the real estate market and others. While short term supply and demand remains above the line, the continuing growth of this particular sector depends on the government spending plans.

For the Residential Sales market, while prices have remained stable over 2015, there has been a slide in transaction volumes, although developers are still generally successful with new product launches. Residential Rents have remained stable this quarter due to limited demand.

Office space demand remains stagnant, again due to the slowdown in the oil sector and government infrastructure investment. In spite of this, Grade A office rentals have remained stable due to minimal vacancies in quality projects. However, office completions in tow throughout the year are expected to increase the market-wide vacancy rate.

Retail rentals remains stable this quarter and this is expected to continue in the short-term. A number of Super Regional malls are set to enter the market on 2018, which will partly be supported by new population and tourism growth.

The Hospitality market witnessed solid growth in hotel guests above 2014 levels driven by wide ranging initiatives to grow the tourism sector. ADRs have also registered an increase of 4% in YT May compared to the same period in 2014. Hotel occupancies registered 77% in YT May reaching the same levels as 2014.

SOURCE: Roots Land Real Estate