In reports reflecting sales growth in real
estate for last year, 2014, we’ve seen a double digit growth for Abu Dhabi
real estate market. Villa sales
prices rose by 16% and apartments up 15%. Rent rates increased by 10%, and 9%
for apartments, villas respectively.
It’s been said that investors
in Abu Dhabi’s real estate sector can expect sustained rental growth towards 2015.
Abu
Dhabi Real Estate Market in Q2 of 2015
This forecast has indeed been positive in
both its fulfillment and growth. The second quarter (Q2) of 2015 saw continued
stabilization across all asset classes, following the 2013-2014 market
recovery. However, the pace of demand growth has slowed due to the decline in
oil prices. The decline of the oil sector has lead to a reduction in government
spending and sentiment, affecting the real estate market. While short term
supply remains under control, the extent to which stable market conditions will
continue very much depends on government spending plans.
For the Residential Sales market, while
prices have remained stable over Q2 2015, there has been continued downward
pressure on transaction volumes, although developers are still generally
successful with new product launches. Residential Rents have remained stable
this quarter due to limited demand growth, but with vacancies remaining low in
high quality, well-located schemes.
Office demand remains subdued due to
contraction in some sectors and a slowdown in the oil sector and government
infrastructure investment. In spite of this, Grade A office rents have remained
stable due to minimal vacancies in quality stock. Further office completions
throughout the year are expected to increase the market-wide vacancy rate, but
with Grade A rents being upheld.
Retail Rents remained 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 from 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
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