Thursday, February 23, 2012

More rental declines likely in Abu Dhabi this year


With supplies expected to surpass demand over the next 12 months, rentals in Abu Dhabi will drop further this year, as the emirate works towards a five percent growth, said CBRE, the real estate consultant.

Despite several positives such as sound macro-economic fundamentals, stable political environment, and a solid fiscal stance, downside risks still persist with huge delivery of considerable volume of new developments, involving commercial and residential sectors, said CBRE, in its market view.

The office sector in Abu Dhabi has also seen steady decline in lease rates last year, with further deflationary pressures anticipated over the next one year, as fresh supplies hit the market.

Landlords too, are getting more realistic and flexible in their approach to leasing, offering rent-free periods as standard market practice. The office market has seen renewed interest from commercial occupiers, seeking to expand their operations, the report said.

Meanwhile, the residential sector in Abu Dhabi continued to see modest decline in rents. Delivery delays last year have helped in alleviating the onset of more aggressive deflationary pressures.

As for UAE real estate sector, it has “selectively bottomed”, with major financials poised for growth. The banks in Abu Dhabi are well positioned to benefit, it is said.

According to leading real estate specialists, investment in UAE real estate sector by GCC nationals is growing, with more banks returning to real estate financing. According to real estate specialist, there has been an increase of local buyers, seeking to invest in a real estate market, at the backdrop of growing real estate financing activity.

At present, 95 percent of lenders have returned to the UAE market, led by Tamweel, the report said.

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