Residential rents in the emirate of Abu Dhabi declined by 2% quarter-on-quarter while rents for office space as well as hotel occupancy rates also declined, according to CBRE’s Q3 2016 Marketview for Abu Dhabi (pdf) published on Sunday.

The total year-on-year decline in average housing rentals amounted to 5%, largely due to declines in the luxury segment with more affordable housing options remaining flat or recording modest rental growth. CBRE’s report stated that average residential rents dropped mainly due to a staggering economy as well as job cuts.

Secondary office rentals dropped as well, also mainly due to job losses and downsizing of offices. The decline compared to the same period last year amounted to 9% while rents for Grade A offices remained largely stable.

The hospitality market also recorded declining revenues, mainly caused by „sustained deflation of room rates,“ according to CBRE. Occupancy rates in the emirate fell around 3% compared to the same period last year. The report also stated that Abu Dhabi’s hotel market was still largely driven by corporate requirements, despite efforts to diversify the market. Now the ongoing austerity measures and a weak economy coupled with a steadily rising room supply inevitably have a negative effect on the market.

In its outlook CBRE states that it expects further declines in housing rents with more pressure applying to the luxury segment rather than the affordable housing sector. For the office market it expects a further shift towards a tenant-driven market as landlords try to maintain occupancy rates. Considering the hospitality sector, it predicts a slightly better overall performance in the fourth quarter due to traditionally higher occupancy rates during the winter but suggests that the decline is in general likely to continue.