ABU DHABI: The real estate market in Abu Dhabi, UAE, saw a minor decline during the second quarter in most sectors for the first time in three years, said a report. While supply is under control, reduced demand from the contraction of the oil sector and lower government spending has started to affect real estate markets, said the JLL Abu Dhabi Real Estate Market Overview. The future outlook is largely dependent on the return of government spending, it said.
The residential market started to face downward pressure with vacancy rates increasing and rents and sale prices beginning to decline. With increasing job cuts and reducing disposal incomes, vacancy rates are set to rise, further impacting rents and prices in the second half of the year, it added. Downsizing in the oil and government sectors has continued throughout Q2 following the decline in oil prices and government spending, impacting the office market. As a result, demand has reduced, with office rents declining 3 per cent quarter-on-quarter.
Despite the reduction in retail spending, retail rents remained stable this quarter. Vacancies remain minimal within regional and super regional malls, said the report. The hospitality market registered a 13 per cent year-on-year drop in ADRs, as the decline in corporate demand triggered by lower oil prices has continued throughout Q2 2016. Occupancy rates have been more stable, it said.
