(MENAFN- Khaleej Times) The housing market in Abu Dhabi saw flat growth in rents during the second quarter of the year, while remaining stable this quarter, according to real estate investment and advisory firm JLL.
David Dudley, international director at JLL Mena, said the trend is in line with the forecast he made.
"As we predicted earlier in the year, we are expecting single-digit rental growth during 2015, following a 17 per cent growth in 2013 and 11 per cent in 2014, as supply and demand become more balanced," he said.
In its report on Abu Dhabi, it said demand growth has softened, stock completions currently remain stable and vacancy rates remain minimal within quality schemes.
JLL said that the emirate did not receive any major delivery during this quarter, keeping residential stock at approximately 244,000 units. However, approximately 6,000 residential units are expected to enter the market by the end of 2015, dominated by the delivery of The Views in Saraya, Hydra Avenue and The Wave on Reem Island, C59 in Rawdhat and Amwaj 2 in Al Raha Beach.
For the residential sales market, prices have remained stable in the second quarter of the year following a 25 per cent annual growth during 2013 and 2014.
While prices have been upheld, there has been continued downward pressure on transaction volumes due to a decline in sentiment. The second quarter of 2015 saw continued stabilisation across all asset classes, following the 2013-14 market recovery.
"The pace of demand growth has slowed due to the decline in oil prices affecting the strength of the oil sector and leading to a reduction in government spending and sentiment," JLL said. While short-term supply remains under control, the extent to which stable market conditions will continue very much depends on government spending plans, the report said.
For the residential sales market, the report said while prices have remained stable over in the April-June period in 2015. There has been continued downward pressure on transaction volumes due to the decline in sentiment, although developers are still generally successful with new product launches. Residential rents have remained stable this quarter due to limited demand growth, but with vacancies remaining low in high quality, well-located schemes, it said.
Dudley said: "The general trend for the second quarter and indeed the first half of 2015 has been stability, with performance of most sectors remaining flat and a slight increase in hospitality performance."
"Following a two-year bull run we are currently going through a period of mid-cycle stabilisation. 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 petrochemicals sector, and also lead to a reduction in domestic government spending as the government re-prioritises its projects and a decline in investor sentiment."
"We still expect demand growth to continue, but at a slower pace."
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