New Developer Rating Indicates Deficit of Grade A Developers in Abu Dhabi
Residential sale prices held in Q409, but sales volumes increased relative to previous quarters. Landmark forecast that prices are likely to remain stable in Q110.
For the leasing market, Landmark Advisory previously forecasted market-wide declines across Abu Dhabi during Q409 which was confirmed by the onset of a rental correction during this period. “Even high-end units saw their rents fall up to 15%, but, as we predicted, it was low quality units that fared worst,” explained Ms. Downs. “Since Q209, the supply and demand dynamics of Abu Dhabi’s rental market have been changing. The rent declines observed in Q409 are consistent with Landmark Advisory’s analysis throughout 2009.”
Landmark predict that rents are likely to keep declining throughout Q1 2010 as more supply is handed over and landlords become increasingly flexible: “We expect continued relocation from Abu Dhabi to Dubai, which will put further downward pressure on Abu Dhabi rents,” summarized Ms. Downs.
In terms of commercial property, leasing volumes for office space remained low in Dubai whereas they increased in the capital. “Office leasing transactions in Abu Dhabi have slightly increased during Q409 as more companies try to settle in the local market. This follows two consecutive quarters during Q2-Q309 during which the office market slowed considerably, particularly during the summer months,” explained Ms. Downs.
“The rent levels for office space in Abu Dhabi are likely to keep declining as more supply is delivered and landlords become increasingly flexible in order to guarantee good occupancy rates,” continued Ms. Downs. “Quality and location will determine whether rents hold, and poor quality units in areas such as Tourist Club Area, Electra Street and the east side of Salam and Hamdan Street are likely to be the hardest hit.”
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