Abu Dhabi Real Estate Outlook PositiveThursday, September 17, 2009
The demand for residential accommodation in Abu Dhabi continues to remain strong due to the current lack of new supply. However, the knock-on effect of lower rents in Dubai could precipitate a supply-demand driven market correction as more residents and businesses choose Dubai over Abu Dhabi, says EFG-Hermes in its latest report on the UAE's real estate and construction sector. The rent differential between Dubai and other emirates [in particular Abu Dhabi] has resulted in a significant proportion of cross-emirate migration. Currently there is a trickle of residents and businesses taking advantage of Dubai's lower-cost environment and moving back or into Dubai from the capital, mostly for convenience of lifestyle reasons. If this trend continues and increases, it could exert downward pressure on prices and rents in Abu Dhabi, narrowing the differential and changing the overall outlook," the report said. EFG-Hermes also said in Abu Dhabi, the end-user demand looks set to pick-up.
"This is owing to the greater availability of mortgage financing and a short to medium term supply-demand mismatch, coupled with a structured pace of development and a move towards greater economic liberalisation," the report added. Commenting on the EFG-Hermes report, Blair Hagkull, Jones Lang LaSalle's managing director for the Middle East and North Africa (MENA) region, told Gulf News the fundamentals of the Abu Dhabi property market in the long run remains positive."However, very clearly there's a growing gap between Abu Dhabi and Dubai residential and office accommodation costs. As Dubai prices moderate, the value proposition for residential users in Abu Dhabi becomes more challenging," Hagkull added. On the projects of Aldar Properties and Sorouh, Abu Dhabi's two largest property developers, the report said their longer-term projects could be scaled back in line with changing market dynamics.Source: Gulf News