Advisory firm JLL released its Q2 2015 Abu Dhabi Real Estate Overview report that showed stability in the residential market for the second quarter.
David Dudley, international director and head of Abu Dhabi Office at JLL MENA, commented, “The general trend for Q2 and indeed the first half of 2015 has been stability, with performance of most sectors remaining flat, and a slight increase in hospitality performance.”
He commented: “Following a two year bull-run we are currently going through a period of mid-cycle stabilization. This is primarily driven by a slow-down in the pace of demand growth, but with short term supply completions under control the market conditions are stable. The softening of demand principally stems from the decline in oil prices, which has directly affected Abu Dhabi’s dominant petro-chemicals sector, and also lead to a reduction in domestic government spending as the government re-prioritises its projects, and a decline in investor sentiment.”
He added, “We still expect demand growth to continue, but at a slower pace. Employment creation and residential demand growth will continue to be sustained from projects commenced while oil prices were high – with projects such as the airport and Etihad expansion having an economic multiplier effect. However the extent to which conditions remain stable over the next year or so very much depends on the government’s spending plans. With an increasing cost of living and a reduction in demand, we are currently at a ‘tipping point’, with market stability very much dependent on the government continuing to invest in to major new infrastructure and economic development projects.”
The report also mentioned that further key developments this quarter have been the government announcing new laws. The long awaited real estate laws have now been announced and are set for implementation, including provision for a new Real Estate Regulatory Authority and new regulations affecting escrow accounts, land and property registration, strata law, the licencing of real estate activity and new fees and procedures.