Dubai: Abu Dhabi’s residential supply lines have taken a sharp dip, with only 1,160 units getting completed in the third quarter. And prospects are for a further 3,000 odd units during the final quarter of this year, according to the latest update from JLL.
It could be that in an uncertain job market, reducing the pace of handovers will serve the interests of Abu Dhabi developers and landlords better by maintaining a tight check on rental declines.
“Q3-16 has witnessed another wave of job cuts within government, oil and gas and financial services sectors, with further rationalisation expected as large-scale mergers continue,” states the JLL report. “This has resulted in a further decline in population growth, impacting on residential demand.
“In addition, the reduction in disposable incomes, housing allowances and other benefits, means that existing residents are looking for cheaper and smaller housing options.”
This takes the total residential stock to about 247,300 units, with the latest deliveries including Shams Tower and Najmat C21 Tower on Reem Island, Saraya One on Saraya and two residential buildings within Rawdhat.
The residential market remains under pressure on both rents and sale prices. In JLL’s estimates, average prime rents for two-bedroom apartments witnessed a nominal decline of 2 per cent quarter-on-quarter to around Dh157,000.
As for sales prices, on prime properties, these declined by 3 per cent quarter-on-quarter to Dh14,750 a square metre, and were “affected by the continued reduction in transaction volumes throughout 2016”.
According to the report: “While annual supply completions remain suppressed relative to previous years, increased supply at a time of weak demand is expected to continue to push up residential vacancy rates, causing further rental decline by the end of 2016. Many landlords have been prepared to accept a slight rental reduction in order to lock in occupancy rates.”
