Abu Dhabi’s real estate sector remained sluggish with no new office space inventory coming on to the market as a result of slow commercial activity, real estate company JLL said in a report.
The commercial sector received no new deliveries during the third quarter of this year, according to the company's latest UAE Market Report for the third quarter, with total office stock for Abu Dhabi remaining at 3.8 million square metres of gross leasable area. This refers to the amount of space available for rent in a commercial property.
“Demand for office space in Abu Dhabi remains limited as occupiers continue to focus on consolidating their operations and downsizing their space to smaller units,” the company said in the report. “As a result, there remains active demand for smaller sized units less than 100 square metres, and serviced office space, primarily for licensing purposes.”
Rents for Grade A office space have fallen 6 per cent year-on-year in the capital, and the amount of vacant space increased to 27 per cent of total stock.
Abu Dhabi has made a raft of changes to boost foreign investment, particularly in real estate this year. In April, the government amended real estate laws allowing foreigners to own freehold property in designated zones to increase foreign direct investment and boost the economy. Ownership of property was previously only allowed for UAE and GCC nationals. Foreign investors in investment zones were granted leasehold arrangements with a maximum 99-year time period.
JLL said relaxing rules on foreign ownership would stimulate demand in the long-run. Abu Dhabi's mid-market residential segment, for example, could advance particularly from schemes such as Aldar's Saadiyat Reserves on Saadiyat Island.
The developer is also looking to ramp up foreign investment through discounted offers on 10 of its developments, with marked-down sale prices and lower registration fees, among other incentives.
Around 380 residential units were completed in the third quarter, JLL said, bringing total residential stock in the emirate to 260,000 units. Prices of Abu Dhabi apartments fell 10 per cent year-on-year, while villa prices dropped 4 per cent, but prices of both have been flat over the past quarter.
"While sale prices have remained relatively stable in recent months, the subdued market conditions have encouraged developers to offer more flexible and attractive payment schemes to attract buyers," the report said.
