Dubai: Abu Dhabi’s property market needs new residential supply and soon to ease some of the pressure on demand and rents. About 4,000 units are likely to be delivered by the end of the year, primarily on Al Reem Island’s high-rise cluster, as well as at the Rawdhat and Saraya developments, according to a new report from JLL, the consultancy.

Even this would be a big improvement on the 400 units delivered in Q2-16, with the handovers of Bloom Central Apartments on Airport Road, Nalaya Villas on Reem Island and residential buildings within Danet and Rawdhat.

If all goes well, another 13,000 units should be ready in the next two years.

But new ready units entering the rental market in itself will not solve the mounting cost of living for many of Abu Dhabi residents. “The new 3 per cent municipality fee on Abu Dhabi expat rents - combined with the previous removal of fuel and water subsidies - continue to increase the cost of living,” states the JLL report. “Additionally, a reduction in employment allowances and benefits is further contributing a reduction in disposable incomes, leading some residents to consider downsizing.”

But the wider rental market will more directly reflect developments in the economy. And it could be reflected this quarter itself “as expats with families leave given the end of the academic year or choose to downsize as their tenancies expire,” states the JLL report. “This is expected to put further pressure on rents in the latter has of the year.”

JLL makes a mention of Adnoc’s decision to let go of 5,000 of its employees, of which 2,000 cuts have already taken place. “This combined with further job cuts in the government and other sectors is leading to a decline in population growth.”

the report suggests that average rents for upscale two-bedroom apartments decreased by 2 per cent to Dh160,000 “due to a slight increase in vacancy rates”, while average sale prices on prime properties were down 5 per cent.

But it is Abu Dhabi’s office market that remains the worst affected among property categories. “There are increasing sings of oil companies reducing their office requirements and relinquishing space,” JLL notes.

“Indirectly, low oil prices have led to spending cuts in the government sector, with some entities also reducing their office space. Current office requirements are limited and this is expected to continue over the rest of 2016.”