Abu Dhabi buildings construction completion totals down in 2016.
Building completions are at a 10-year low in the UAE generally, particularly more so in Abu Dhabi. It is according to Property consultants Jones Lang LaSalle (JLL)’s latest Abu Dhabi Real Estate Oveview report, due to the current conjecture of cautious developers, tightened liquidity and new building and environment regulations. This new report has also revealed that smaller scale developments are being phased away over time.
JLL report says Abu Dhabi, while remaining relatively stable in the third quarter, is showing increased signs of caution with a slow-down in government domestic spending, reduction in transaction volumes and investor sentiment, according their new market review.
JLL said that due to a reduction in government spending, it expects future residential rental demand in the capital city to be affected, and to possibly directly impacting the oil sector and indirectly affecting other sectors as well.
Khaleej Times of October 2015 reported 6 months after oil prices crushed down that “The UAE government plans to cut spending, leading to job cuts and cost controls in government entities and . . . delay the commencement of new mega projects. Further increases to cost of living (through the removal of utilities and fuel subsidies combined with further potential measures such as the introduction of taxes, etc. may further impact future end-user demand.”
More recently, JLL said in its Real Estate Market Overview found that overall, Abu Dhabi’s real estate markets have generally been stable during the first quarter of 2016 despite the continued impact of lower oil prices related revenues and a reduction in domestic government spending.
The resulting current situation is, while demand has been reducing, supply completions have also been doing the same, i.e. thus reducing as well, leading to some relatively stable market conditions.
In fact, the real estate market in the UAE of 2016 is slowing down compared to its significant growth in 2013 and the first half of 2014, as per to this latest JLL report on the UAE.
Moreover, JLL expected that completion rates of residential buildings projects in 2016 to remain lower than in recent years. The materialisation rate of projects in 2015 was below expectations, with only 1,000 units delivered, compared to 7,800 delivered units in Dubai that year.
A low level of sales in the UAE has delayed the handover deadlines for projects in late 2016 and 2017, according to the report.
In the meantime, and apart from the above, expatriate tenants in Abu Dhabi will have to pay a 3% extra on their rent, as a municipality contract fee, a new charge that will be collected with monthly electricity and water bills. UAE nationals are exempt.