Leading real estate specialist, Cluttons, in its latest real estate report has confirmed that several of the stalled projects, including the much-awaited Louvre and Guggenheim Museums in Abu Dhabi will be resumed.
The Abu Dhabi Executive Council has confirmed resumption of several stalled projects in the capital, including the new terminal for Abu Dhabi International Airport. This is a positive indicator for the year 2012, with several developers such as Sorouh and Aldar posting improved profits for 2011. Sorouh has posted Dh.383mn in profits, marking an increase from Dh.16.1mn in 2010. Similarly, Aldar has posted considerable profits worth Dh.642.5mn.
Abu Dhabi has also witnessed changes in the manner of conducting business by residential landlords. Several proactive landlords are taking the help of brokers to rent out their residential properties, and are offering commissions to the agents as an incentive to lease their properties.
There has been a slight decline in rents and residential sales across Abu Dhabi. However, the units in prime apartments continue to let well. The apartments on the St. Regis development of Saadiyat Island are also quite popular.
Several high quality commercial projects, Etihad Tower, Capital Gate, Sowwah Square, and Aldar HQ have come up in the market towards end of 2011. Further, the latest municipality announcement that it will no longer issue major permits for residential villas to be used for commercial purposes, has actually served as a boost to office sector. With this, several companies have been compelled to move to commercial spaces, with Prime Grade A office space proving to be most popular.
A further decline in commercial rentals is expected throughout the year in 2012 (except for Prime Grade A space), bringing rentals down to more realistic levels. With improved flexibility and incentives, rentals are likely to stabilize by end of 2012.
With more stock entering the market, Cluttons anticipates that this will be a challenging year for residential market in Abu Dhabi. The Al Rayanna project will add 1800 apartments this year, while Al Reef Downtown will bring in 1500 apartments.
The rental values have dropped between 6 to 10 percent on some projects, and these will continue to soften in 2012. The demand for residential property is still strong, with latest announcements by the government to resume all landmark projects, and with companies posting considerable profits, all of which has led to a positive effect on expectations of public in general. This scenario is also hoped to boost the economy throughout the year 2012.