City Report: Abu Dhabi
A massive Dh50 billion stimulus package for Abu Dhabi has been announced by Sheikh Mohammed bin Zayed, the Crown Prince. The stimulus package introduced in June will drive initiatives that directly have an impact on the Abu Dhabi Real Estate sector.
A comprehensive review of building regulations for both private and commercial property construction will be carried out, to reducing costs for developers and encourage urban development. We will also see the promotion of partnerships between the public and private sectors. The dual licensing initiative will also stimulate economic growth.
According to multiple market reports, the residential rents and sales prices mostly remained unchanged in the second quarter. However with the UAE’s decision to allow 10-year visas for expats and 100 percent foreign ownership in companies outside of free zones will boost sentiment in the residential market, providing expats with more security over their rights to remain in the UAE.
In Abu Dhabi, sales price declines were more marked, at between 1-10 percent for apartments and around 9-10 percent for villas. An estimated 2,300 residential units were handed over in Abu Dhabi during the second quarter of 2018. State-backed Aldar Properties posted a 10 percent year-on-year increase in sales revenue in the second quarter to Dh1.5 billion. However, its net profit dropped 28 percent. The decline in earnings came even as revenues rose. In May 2016 Aldar Properties acquired Dh3.7 Billion worth of assets from Abu Dhabi Tourism Development and Investment Company (TDIC), this acquisition will facilitate Aldar’s growth plans going forward.
The Abu Dhabi office market is under pressure, rental prices have seen a decline due to companies downsizing and tenants opting for cheaper solutions. However, landlords have picked up on this and are offering tenants lowered rents and appealing incentives.
Within the commercial sector, Grade B and office buildings, the majority of them being older establishments, continue to see downward pressure as corporate tenants consolidate their activities in either smaller or higher quality offices and chose attractive offers from landlords. The prime commercial sector, however, has remained relatively stable with only marginal dips in rents. The negative slump in Abu Dhabi appears to be coming to an end, and the office market should benefit from the growth (direct and indirect) generated by these newly formed entities, the opportunity for dual licensing and 100 % foreign ownership.
Urban development of Abu Dhabi will promote a comprehensive review of building regulations for both private and commercial property construction in a move that can help reduce costs for citizens, investors, residents, and tenants. We still see a demand for good quality properties with good facilities and management. To serve Abu Dhabi’s diversification efforts, Sheikh Mohamed also ordered the establishment of the Abu Dhabi Accelerators and Advanced Industries Council, rightly called Ghadan, meaning or tomorrow. The council was established to encourage value-added investments and technologies holding promise to predict and lead the development of Abu Dhabi’s economy on the local and regional stages. This is setting a foresight into the future and should be viewed as a series of steps to bolster the overall economy to ultimately achieve the goals of the vision document UAE Centennial 2017.