Major commercial property projects in Abu Dhabi get a GO
A number of projects that were held-back in 2011 would begin this year, which promises a positive start for the real-estate market of Abu Dhabi and will attract more prominent developers such as Aldar and Sorouh. One of the biggest projects given green light is the construction of a new terminal in Abu Dhabi International Airport, which is due to open in 2016. Three other initiatives are the Louvre and Guggenheim museums on Saadiyat Island and the prime Grade A office space that is raising the bar for commercial space in the city.
Yet, residential sales have decreased in volumes, and rents are still falling, although the drop is less steep. However, as the island became more affordable, prime apartments are still being rented by tenants. What remains a problem is the shortage of retail facilities at many of the new residential development areas, which is slowly being addressed in places such as the Marina Square, however more work is necessary. There is also a noticeable change in the way landlords and developers are conducting their affairs in 2012, as proactive businessmen have started approaching brokers to let their residential properties.
The office sector no longer needs to issue permits for residential villas to be used for commercial purposes, which forced many companies to move to purpose built commercial space.
Few owners of Prime Grade A office space are set to achieve rents above AED 2,000 per square meters per annum in 2012. New build quality stock is coming to the market at AED 1,400 to 1,600 per square meters per annum. Experts predict rents to go down to more realistic levels across most submarkets with the exception Prime Grade A office spaces. 2012 is also expected to be challenging for the Abu Dhabi residential market as more stock comes onto the market, including the Al Rayanna project which will release 1,800 apartments and the Al Reef Downtown which will release 1500 apartments. Apartment rental values have fallen with 6% to 10% and will continue to soften throughout 2012.
Nevertheless, investors and developers are not to worry as demand for residential property remains high and together with the recent announcement by the government to resume landmark projects, and the significant profits made by companies in the sector, a positive trend is visible that the economy will continue to reenergise throughout 2012.
