Increasing job cuts in the private and public sector in Abu Dhabi have led to downward pressure on rents and sales prices, according to a report (pdf) on the emirate’s real estate market in 3Q 2016 by consultancy JLL.
Prime rents for two-bedroom apartments fell by an average of 6% year-on-year in the third quarter while sales prices in prime locations fell by 11% in the same period, JLL reports.
The consultancy blamed most of the downward pressure on the lower demand caused by a recent wave of job cuts in several sectors, reducing the customer basis for real estate.
Developers in Abu Dhabi had actually adjusted to the situation by scaling back their supply in order to match a reduced demand. Similar market situations in Dubai have previously led to much sharper declines due to a failure to adjust.
The impact of the current market situation can also be felt in Abu Dhabi’s office market where rents for Grade A and Grade B office supply dropped by 5 and 12%, respectively, year-on-year.
Over 1,160 new units were delivered in the third quarter, bringing the total residential stock in Abu Dhabi to 247,300 units. An additional 3,000 units are expected by the end of the year.