The real estate market in Abu Dhabi has turned increasingly competitive, in terms of rental pricing and supply of quality products during the third quarter this year, said the latest Jones Lang LaSalle (JLL) report.
In its latest report, JLL MENA revealed that despite delayed deliveries of few projects, the market continued to witness additional supplies during the third quarter, with 2800 new units being delivered across the residential, office, retail, and hospitality sectors.
The trend is likely to continue into the fourth quarter this year, and more scheduled handovers are expected, the report pointed out.
Abu Dhabi real estate market will grow to be favourable to both buyers and tenants, as the number of residential units are likely to touch 246,000 towards the year 2013, from the present 193,000 units, according to experts.
Last year, abundant supplies and increased vacancies had led to rental declines of nearly 10percent for prime double bedroom units and more than 30 percent decline for lower quality units.
As for the office sector, Grade A office stock has grown by 55,000 sqm, touching nearly 2.4mn sqm during the third quarter. Further, with another 20 percent vacancies, and 150,000 sqm of additional stock yet to enter the market in the next quarter, a downward pressure is likely in Grade A and Grade B office sectors, the report said.
The Head of JLL MENA Abu Dhabi office, David Dudley, said that the government has taken measures to restrict the future supplies, as already enough new supplies have been delivered in the residential, office and retail market during the third quarter.
Given, the downward rental pressure with increased vacancies, tenants across various sectors can now upgrade to new and better quality properties without having to shell out much, he pointed out.
On the whole, improved cost competitiveness, coupled with implementation of market-friendly initiatives by the government, will trigger further demand, and make Abu Dhabi property market more competitive.
Abu Dhabi has also become a competitive market for tenants during the last quarter, given, the narrowing gap in rentals between Grade A and Grade B office sectors.
However, the government has also decided to consolidate projects and government entities, and re-prioritize investment. This may have a short-term negative impact on the market, but such moves may prove very positive for medium-term outlook of the market.