(MENAFN - Arab News) Sound economic fundamentals, a solid fiscal stance, and a stable political environment offer an encouraging outlook for the Abu Dhabi real estate sector in 2012, but analysts warn downside risks still persist with the imminent delivery of new developments for the year in both the commercial and residential sectors.
According to a recent market report released by global research consultants CBRE, economic growth in Abu Dhabi was estimated at 4.5 percent in 2011, projected to grow by five percent in 2012. Meanwhile, residential rental rates on the main island fell by 16 percent year-on-year, while declines on the Abu Dhabi mainland were more pronounced with a 30 percent drop.
For the office sector, by the end of 2011, total supply in the emirate had reached 2.74 million square meters, with average office rental rates ending the year at AED1,400 per square meter per annum. An estimated 600,000 square meters of space is expected to be delivered in 2012, while a further 23,000 residential units are also expected to be handed over.
The figures have been released ahead of Cityscape Abu Dhabi, which takes place from April 22-25 at the Abu Dhabi National Exhibition Centre, and while there are further deflationary pressures in rents and sales anticipated over the next 12 months, the market appears to be steadier than at the same point last year.
"The overall fundamentals of the Abu Dhabi real estate market remain strong with both economic and population growth anticipated for the year ahead," said Matthew Green, head of research and consultancy UAE, CBRE.
"Despite a more constrained transactional market, the occupier segment is starting to show more signs of life with limited available completed stock helping to maintain high occupancy rates from premium offerings."
"The existing CBD should also remain in high demand for both residential and commercial spaces, particularly as Abu Dhabi awaits further completions of projects in Sowwah Square, Marina Square and the wider Reem Island development."
Chris Speller, group director for Cityscape Abu Dhabi, said: "The Abu Dhabi real estate market is now a far more stable environment with sales and rental rate declines slowing against the same period last year. There is some downside pressure still present in the market, although the increased level of options is good news for occupiers."
Now in its 6th year, Cityscape Abu Dhabi has firmly established itself as the region's leading real estate development and investment event. Last year, the exhibition attracted more than 25,000 visitors from 78 countries looking to learn of the latest developments and real estate market trends.
"Cityscape Abu Dhabi has become the annual barometer for the real estate market," said Speller. "For investors and occupiers, the event offers the opportunity to meet with the developers behind more than 300 real estate developments, and given the amount of new residential and commercial units being delivered this year, there certainly is a lot for them to look forward to."
The four-day event returns with regular features, the Cityscape Awards for Real Estate - MENA on April 23, celebrating the latest cutting-edge projects shaping modern city skylines across the Middle East and Africa; and the Investor Round Tables, taking place from April 22-24, where CEO level investors and developers discuss partnership opportunities and strategy.
Also returning is the Middle East Real Estate Summit, where a panel of more than 40 industry-leading speakers currently active in the Middle East will share their collective experience and tackle the major challenges facing the regional real estate sector.