A number of major regulatory changes were implemented during the quarter, including the Abu Dhabi Executive Council resolution on 10 November 2013 to remove the 5% cap on annual rent increases in the emirate. In the absence of any contractual restriction on rent increases, landlords will now have the sole right to decide rentals.

The move comes at a time when inflation levels in the capital are already starting to rise. According to SCAD, Abu Dhabi’s inflation rate has risen to its highest level since July 2011. Inflation for 2013 was recorded at 1.3%, with housing and utility costs accounting for almost 38% of consumer expenses, gaining 1.5% from a year earlier.

Abu Dhabi’s hospitality industry enjoyed a strong final quarter, capping a more positive year for the tourism sector. By November, visitor numbers had reached 2.5 million, surpassing 2012 final figure of close to 2.4 million.

Data released by the Abu Dhabi Tourism and Culture Authority has shown that November arrivals at the Emirate’s 149 hotels and hotel apartments rose 26% year-on-year, attracting 0.26 million guests and 0.85 million nights.
The notable increase in total number of visitors during 2013 has had a resoundingly positive impact on hotel occupancy rates. According to ADTA, occupancy levels for November rose by around 10% to 83%, with total revenues also increasing 19% to AED 669 million.

Office Market
The capital’s office market witnessed a relatively quiet quarter, with only the sustained activity from the public sector helping to maintain the markets forward momentum.

This was reflected by a quarter of flat rental growth, with both prime and secondary rentals remaining static.
Whilst enquiry levels for prime office accommodations have been positive over the past 12 months, the typical small size of these requirements (<500 m2) and the low number of completed transactions perhaps reflects the private sector demand dynamic at this time. However, we expect to see a rise in occupier activity once the Al Maryah Island freezone becomes a reality.

Chart 1: Abu Dhabi Office Supply (2008 –Q4 2013)0%2%4%6%8%10%12%14%16%0.00.51.01.52.02.53.03.54.02008 Q1Q2Q3Q42009 Q1Q2Q3Q42010 Q1Q2Q3Q42011 Q1Q2Q3Q42012 Q1Q2Q3Q42013 Q1Q2Q3Q4Quarterly Change (%)Office Stock (million m2)Office Supply (million m2)
Q4 2013 ABU DHABI Office & Residential | MarketView
2
Average prime rentals for Grade A commercial office space remains stable at AED1,850/m2/annum, although variation in headline rents were still evident, dependent on the quality of the individual tenant, lease structure and incentive packages.

Secondary office rental rates also remained steady at AED1,200/m2/annum, although further rental deflation is expected over the next year as new good quality developments are completed, and as the current fligh 

We accept Guest Posts

Download the Dubai City Guide iPhone mobile app

DubaiCityGuide.com is owned and managed by Cyber Gear