Abu Dhabi property market

Residential Market Overview

Sorouh has calculated that the Abu Dhabi property market will remain undersupplied until 2012 due to delays caused by inflation in building material prices and financial concerns in international markets.

Sorouh remains optimistic about the future of real estate in Abu Dhabi for the following reasons:  

• A new law regulating the real estate sector, currently in development, will bring greater clarity to the domestic market
• The Government has committed to supporting the city's financial system
• Years of prudent fiscal management, supported by strong oil prices, will underpin all strategic plans
• The Government has already allocated a significant budget to many new infrastructure projects that will have a positive influence and will drive continued growth

Sorouh's analysis indicates healthy, sustainable growth in demand for quality homes and accommodation in Abu Dhabi, fuelled by an increase in population and other standard demographic indicators.

Commercial Property Market Overview

Abu Dhabi's historical under-supply of quality office space has been reflected in increasing rentals. There has been a minimal impact from the financial crisis witnessed elsewhere in the world due to the following factors:

• Demand for office space remains influenced by the current under-supply
• Abu Dhabi's corporate environment is relatively sheltered from the international market, with a large proportion of local companies and Government departments taking up office space
• Historically, Abu Dhabi has experienced huge demand for commercial property, reflected by the number of villas converted to commercial offices across the city, and established companies being forced to take low quality space in mixed-use buildings.

W e anticipate continued demand for office space across Abu Dhabi, due largely to the Emirate's ongoing, sustainable, economic diversification and growth.

Retail Property Market Review

Abu Dhabi Mall, Marina Mall, Al Wahda Mall, and Al Khalidiya are the major destination malls in Abu Dhabi. Despite the presence of these world-class facilities, retail supply currently does not match demand, Abu Dhabi retail mall stock is estimated around 470,000 sqm according to Tri Research.  The bulk of this space is represented by the above-mentioned malls, accounting for 385,000 sqm or 80 per cent of leasable space, and dominated by brand repetition in each centers. The market remains under-supplied in the category of community shopping centers.

Demand for retail space in Abu Dhabi is expected to continue to grow, supported by economic growth and stability, and ambitious tourism plans being implemented by the Abu Dhabi Tourism Authority (ADTA). 

Developments in progress will add a further 600,000 sqm by 2012, according to Colliers International, a global affiliation of independently owned real estate services firms.  Major projects include Al Yas retail development, Al Reem Mall and Building Material City Mall.

Retail gross leasable area per capita is expected to double from 0.43 sqm per person to around 0.9 square meters per person, according to industry estimates of the growth of retail space and population.

Future retail supply in Abu Dhabi is likely to experience high absorption in response to the growth in future demand and the branding of Abu Dhabi as international destination, focused on tourism and leisure, linked to retail malls being positioned as entertainment concepts.

 

Hotel Market Review

According to data compiled by the Abu Dhabi Tourism Authority, there are 72 hotels in Abu Dhabi representing over10, 000 units. The occupancy rate has risen over the past five years from just 66 per cent in 2002 to over 85 per cent in 2007 in tandem with the growing significance of Abu Dhabi in the world economy.

Hotel rooms represent two thirds of hotel and hotel apartment supply in the city, with the five-star venues achieving the highest incomes at with an average daily rate of AED 820 (dollar amount).  The Four-star daily rate averages at AED 297 (dollar rate).

Abu Dhabi's hotel industry is seasonal, with occupancies peaking between September and April. As new supply enters the market in the coming years, it will be essential to maintain acceptable occupancy levels and rates during the off-peak season.

Corporate and MICE (meetings, incentives, conferences and exhibitions) demand will be two of the strongest drivers of demand as Abu Dhabi implements on ambitious plan to become an international MICE destination.

Abu Dhabi Tourism Authority expects an additional 12,000 hotel rooms and hotel apartments will be built between 2009 and 2012. More than 40 per cent will be classified as five-star accommodation.