Saturday, December 13, 2008

Property values in Abu Dhabi likely to grow

Despite the global economic conditions and the consequent slowdown in UAE property sector, the property values in Abu Dhabi will keep growing in the short-term, revealed the recent research by the Citigroup.

Being the second largest Arab economy, next only to Saudi Arabia, the UAE has plenty of current surpluses and can easily depend on sovereign wealth to cover the financial cost of property projects, despite the poor investment returns in 2008, the Citigroup explained.

But unlike in Dubai, Abu Dhabi outstrips supply for all segments of property sector. At present scarcity of prime office space has led to increase in rents by 40 percent during the period 2005-06, by 10 percent in 2006-07, and 14 percent in 2008.

Despite the huge rental increase, the average prime rates are competitive, considering the global values. The rents in Abu Dhabi are still behind London and Hong Kong, Singapore, Moscow and Tokyo.

The supply in residential sector is expected to surpass demand by 2012. According to Citigroup, the extremely low vacancy rates, high price and rental increases of properties, would continue to boost sales and rents in residential segment. Even the retail sector can relax and enjoy solid increase as long as the existing supply stock lasts.

Pointing to the "Plan Abu Dhabi 2030", which briefs the development framework for Abu Dhabi, the Citigroup noted that is a prime tourist destination with a huge mix of leisure tourists and business travelers. Also, the national spending power contributes to the retail market in Abu Dhabi, as against Dubai which depends on tourist inflows.

Citigroup has the third largest GDP per capita, and given the strong growth forecasts and oil surpluses, it seems that national spending levels seem to continue to rise, the Citigroup explained.

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