While the first quarter of 2018 has recorded a slowing rate of capital value declines across the UAE, developers of high end homes in Abu Dhabi seem to be sensing a bottoming of the market and are pressing ahead with new projects, according to international real estate consultancy, Cluttons. 

Faisal Durrani, Head of Research at Cluttons said: “2018 looks set to be a better year for the UAE economy as a whole, with GDP expected to expand by 2.6%, from a seven year low growth rate of 1.7% last year. This is, in turn, expected to help support more stable rates of job creation and increased government spending as confidence levels improve. 

“In fact, following the announcement by ADNOC at the end of last year to spend AED 400 billion over the next five years to boost growth, we expect to see further infrastructure project announcements this year as the government moves to bolster economic growth.”

The Cluttons Abu Dhabi Property Market Outlook report for Spring 2018 indicates that the very top of Abu Dhabi’s sales market has been reasonably positive, and is showing signs of stabilising. Sea facing villas on Saadiyat Island for instance, the most expensive residential property type in the capital at AED 1,700 per square foot, have seen no movement in prices for two consecutive quarters according to Cluttons.

“This trend is likely to help tempt buyers back into the market especially as we feel the stability is likely to persist,” says Edward Carnegy, Head of Cluttons Abu Dhabi. “In fact, we have noted a marginal uptick in demand from Emirati buyers predominantly, looking for second homes, or expanding their buy-to-let investment portfolios on Saadiyat Island. Interestingly, of the 13 submarkets we monitor in Abu Dhabi, sea view villas on Saadiyat Island have experienced the biggest price correction since 2015, with prices dropping by an average of 26.1%,” he added.

According to the report, Abu Dhabi’s residential market has the potential to start stabilising by the end of 2018, but until then further softening is expected to persist. “The additional declines will be catalysed by rising levels of property handovers in locations such as Al Raha Beach and Yas Island by Aldar, which will curtail chances for a quicker recovery. We expect a decline of a further 5% to 7% for both residential rents and values during 2018, largely as supply and demand will likely remain out of kilter for a while yet. Positively, bulk corporate leases are back on the agenda for some firms as they move to secure better lease terms, or indeed better quality accommodation for staff, while also making a saving.” Durrani concluded.

For more information, including more detailed graphs and commentary, click here to access and download the Cluttons report.

If you would like to contact the author for additional information, email Faisal Durrani from Cluttons via the contact details below.

See also:

Emaar and Aldar work together to launch joint projects worth up to AED 30 billion

AED 1.3 billion main contract awarded for Water’s Edge development on Yas Island

Abu Dhabi waterfront development sells out generating over AED 800 million