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Although performance across Abu Dhabi’s real estate market remained relatively subdued over the last quarter, the launch of the first phase of the ‘Tomorrow 2021’ initiative paves the way for a more positive investment environment in the longer term, according to JLL’s Q3 market report.
According to the report, one significant element of the initiative is to encourage startups to enter the market more efficiently, resulting in a boost in overall commercial activity in the long term.
“With the reforms set to impact the real estate sector, the ‘Tomorrow 2021’ stimulus package will particularly focus on increased investment in the commercial market in the long term. Further aspects of the package will impact free zone businesses, allowing them to trade on shore. This will boost economic activity and therefore benefit the real estate market in the future,” said Peter Stebbings, Head of Abu Dhabi Office- Senior Director Valuation Advisory, MENA, JLL.
An ongoing hot topic on Abu Dhabi’s real estate agenda, also stimulated by additional government reforms, is the impact of the recent decisions to allow 10-year visas for certain categories of expatriates and 100% foreign ownership in companies located outside of free zones.
“A game changer for Abu Dhabi and the wider UAE’s residential property sector is the increased market appetite stimulated by the 10-year visa option. Developers are already responding with more incentives to attract investors and this significant initiative is expected to elevate confidence in the market over time,” said Thierry Delvaux, Chief Executive Officer for Middle East and Africa, JLL.
The signs of recovering oil prices in Q3 may also have a positive impact on future office demand by increasing employment, reversing the contractions resulting from the consolidation of key Abu Dhabi entities such as ADNOC and Mubadala. Performance in the office sector remained stable over the past quarter with demand for space still limited and the overall stock remaining at approximately 3.7 million sq m Gross Leasable Area (GLA).
The hospitality market saw an occupancy increase of 3 basis points year on year, with major new leisure developments attracting more visitors. However, despite occupancy levels reaching 70% in Q3 there was a decline in Average Daily Rates (ADR) compared to same period last year and Revenue Per available room (RevPar) declined by 3% in YT August 2018 compared to the same period last year.
In Q3 the retail market moved further in favour of tenants with owners offering more attractive terms to retain and attract retailers.
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