Actual situation of Abu Dhabi real estate market

Abu Dhabi’s real estate markets remain under-supplied in most sectors with vacancies currently at very low levels. This situation will change slightly as more supply comes on stream. The residential market will generally remain under-supplied, particularly for lower to middle market segments. Retail supply will remain more balanced relative to spending power and the office market will generally remain under-supplied, particularly for lower to middle market segments.

Office buildings on Abu Dhabi Island such as Al Bateen and Khalifa Park, typically comprising Grade B buildings (reasonable quality for current standards, albeit residential conversions) which have attracted professional services, investment firms and public sector groups due to the current absence of higher quality stock.

As more supply comes on stream, take-up rates will increase as companies take up more space per head and move more employees to Abu Dhabi. Total market-wide demand for office space in Abu Dhabi Metropolitan area will increase significantly driven by an increase in employment in office based industries and the expansion of new clusters and increasing deal sizes.

Some of the demand for new space will be generated by existing occupiers upgrading their office space in a flight to quality but the majority of new office space will need to be occupied by new demand from companies expanding their Abu Dhabi base and new entrants to the Abu Dhabi market.

The rise in employment in the services sectors will drive demand for office space and will continue to increase the spending power of the population, driving demand for retail. Key opportunities and challenges Abu Dhabi‘s philosophy of seeking sustainable long term growth recognises that population growth needs to be supported by a stepchange in the underlying economic fundamentals to establish new levels of demand (as covered in the economy section of this report) as well as  putting in place sufficient services including healthcare and education facilities.

Whilst rapid population turnover can create incredible dynamism and is a feature of some of the world’s most vibrant global cities, it also brings challenges relating to community soul and social cohesion and this will need to be continually managed. Whilst the Government is taking active steps to upskill Abu Dhabi’s national population, it will need to rely on the continual influx of expatriates from the Arabic world and other nationalities.