Rents in Abu Dhabi continued to increase during the second quarter of 2015, but at the slowest pace for two years as concerns grow over the long-term impact of reduced oil prices.
CBRE’s Abu Dhabi Marketview reported a quarter increase in rents of just 1 per cent, although on a year-on-year basis rents have climbed by 10 per cent in the capital.
Rental increases have also been higher in prime, master planned communities where supply is limited. For instance, rents have increased by 3 per cent at Al Reef Downtown, where a two-bed unit costs between Dh85,000-Dh105,000 per year.
The capital’s office market has also remained subdued as a result of weak occupier demand in a market that is traditionally driven by government occupiers and firms in the oil and gas market.
“This was also compounded by signs of a slowdown within the professional services sector, again driven by reduced Government activity,” said CBRE’s UAE head of research, Mat Green.
Prime office rents remained static at Dh1,600-Dh2,200 per square metre, per year. Rents in the secondary market were also flat at Dh1,1235 per sq m, per year, but are likely to come under pressure as 1.45 million sq m of new space is set to enter the market over the next three years.
Looking ahead, Mr Green said Abu Dhabi’s property market “is still somewhat vulnerable to to the current oil price situation, particularly its potential impact on major occupiers in the government and oil and gas sectors.
“That said, the market situation is softened by the relatively constrained development pipeline. Around 34,000 new residential units will be completed up to 2018, notably down on the five-year average and a similarly tight pipeline also exists for new Grade A office supply.”
Follow The National’s Business section on Twitter