Reforms a boon to Abu Dhabi property says CBRE
New freehold law and visa changes will stimulate residential demand while offices will benefit from government initiatives to create jobs
Changes to Abu Dhabi's freehold law and the new Golden Card system that offers a 10-year visa to investors, entrepreneurs and other key figures are both expected to be supportive of Abu Dhabi's real estate market, consultancy CBRE said.
The firm said 28,000 residential units are set to enter the market between 2020 and 2023, which would increase the current stock of 258,000 units at the end of last year by just over 10 per cent, giving scope for further selective development.
“The competitive market conditions have led to an end-user driven market. Given this business appetite, we see potential for developers to devise creative schemes to engage with more investors and buyers," Simon Townsend, regional head of strategic advisory of CBRE, said in a statement.
CBRE's report gave a broad range for apartment prices (from Dh7,270-Dh19,700 per sq m) and villa prices (Dh6,300-Dh14,210) per square metre, but did not give comparative figures.
A recent report by competitor Chestertons showed apartment prices fell by 10 per cent last year in the capital, and villa prices dropped by 2 per cent.
Chestertons also argued that government reforms and more favourable supply and demand dynamics meant it was "unlikely there will be the same prolonged period of price decreases as witnessed in the last five years".
It said there had been "a marked shift" in sentiment in Abu Dhabi's market over the past 18 months, citing greater demand for affordable schemes.
CBRE's report also highlighted a 2.9 per cent year-on-year increase in hotel occupancy in Abu Dhabi last year, as the capital hosted events such as the Special Olympics, AFC Asian Cup, the Ultimate Fighting Championship's Abu Dhabi Showdown Week and the annual Formula 1 Grand Prix event. Revenue per available room stood at Dh270-Dh370 and occupancy levels stood at 72-74 per cent.
CBRE also said office demand is likely to be supported by government initiatives to create jobs and increase economic activity. It said an extra 600,000 square metres is set to be added to the city's existing office stock of 4.3 million square metres of gross leasable area by 2023. It said ofice demand was likely to be stimulated via the government's Ghadan 21 stimulus and initiatives such as allowing 100 per cent foreign ownership of companies in select sectors.
"In the office sector, landlords have reduced service charges, and are offering capex contributions and longer rent-free periods, as a strategy to sustain higher occupancy levels," Mr Townsend said.
"It is extremely promising to see the government’s ongoing commitment to introducing initiatives that promote economic growth and continued investment in the market," he added.
Updated: February 19, 2020 07:03 PM