The rising cost of living and weakening of the demand for real estate will be the key factors in the further real estate market stabilization or destabilization in the UAE capital Abu Dhabi — JLL experts say.
According to the Abu Dhabi residential real estate market survey made by JLL, the demand for housing in the UAE capital weakens, and prices in the sales and rental segments did not change much in the last three months. Further market stability depends largely on whether the government of the emirate will continue to invest in new infrastructure projects — David Dudley, head of the JLL Abu Dhabi office said.
However, the fall in oil prices observed in recent years led to a reduction in government spending on various construction projects, and the priority of many future projects was revised, which, in turn, led to a decrease in investors' interest.
Another problem for the Abu Dhabi real estate market today is the lack of new real estate projects in various market segments. Thus, according to JLL, no significant new real estate projects were handed over in Abu Dhabi in the first half of the year, and in the second half the market is expected to get only 6000 new units, which is not enough to meet growing demand.
As a result, after handing over new properties in such residential complexes as Saraya, Hydra Avenue and The Wave on Reem Island, C59 in Rawdhat and Amwaj 2 near Al Raha Beach, residential property stock in the Abu Dhabi areas attractive for investments will amount to 250,000 housing units. In 2016 another 6000 units are expected to enter the market.
On the other hand, the report by MPM Properties indicates the opposite: over the past three months 6,500 new residential units were built in Abu Dhabi, and the further increase of the housing stock size will inevitably lead to prices decline.
Anyway, the second half of the year will obviously be the most indicative period for the Abu Dhabi real estate market further development.