The real estate advisory firm Cluttons sees a pipeline of 38,000 housing units to be delivered by 2014 making the reality sector more competitive.
"Approximately 3,000 residential units have been released into the market in third quarter of 2012, most of which represent apartment development," Cluttons said in its forecast on Abu Dhabi's real estate market.
The residential market has remained stagnant in 2012, it said. However, in general the addition of stock to an already lethargic market has caused rental and capital values to falter.
Capital values of apartments have fallen some 6.8 per cent since third quarter of 2011 and the villa market to a lesser extent down three per cent.
"The release of 38,000 units by 2014 undoubtedly will increase the competiveness of the market and force landlords to offer lower rents and more flexible contact terms," the report said.
Residential rental values on the other hand are likely to soften further as a result of the huge increase of stock coming online in the next two years.
Cluttons foresees that in 2013 industrial rents will remain stable across Abu Dhabi and that further opportunities and growth will result from the launch of KIZAD.
Retail and office space prices will depend on the development; with tailored, well-serviced buildings maintaining their prices while others may stagnate or soften.
The IMF recently reviewed its growth projection for the Abu Dhabi economy in 2012 from 4.2 per cent to 5.5 per cent, which could well be a positive reflection of the efforts of the emirate to diversify into a more non-oil based economy, along with the government's continued investment in major public construction projects including Khalifa Port, which opened in September, and rapid development of projects in Saddiyat, Al Reem and Yas Islands.
The Abu Dhabi government has also focused on leisure and retail to boost its non-oil economy.
The official opening of the Dh26.2 billion Khalifa Port in September is set to change the industrial landscape in the region.
With the capacity 2.5 million TEUs, Khalifa Port's container terminal will also handle 12 million tonnes of general cargo.
Khaleej Times
22 October
