Rents in Abu Dhabi city could slip slightly this year after the expected delivery of more than 4,000 new housing units but a decline to their previous low levels could take years, a real estate executive said yesterday.
Gurjit Singh, Chief Operating Officer at Sorouh Real Estate, said demand for housing has remained strong in Abu Dhabi despite a surge in supply over the past year because of the delivery of thousands of new housing units.
Speaking to reporters at the Abu Dhabi Economic Forum, Singh said the new units coming into the market would support the supply-demand balance in the emirate, one of the largest oil exporters in the world.
"I think the delivery of the new units this year will have an impact on rents. This is a good sign, but to push rents back to their previous low levels will. of course, depend on the rate of supply."
"I think that when we see a sort of equilibrium between demand and supply in the city, rents will go down to acceptable levels. This will take a few years. How many years, I have no idea but I know that a recovery will depend on physical stock coming to the market.
"The good thing is that rents in Abu Dhabi have come down from their peak although they remain higher than in Dubai."
Singh said housing in Abu Dhabi is costlier than in other emirates because of strong demand due to high job creation rates, heavy public spending and the fact that Abu Dhabi's economy has "strong fundamentals".
Asked about the impact of the slowdown on bank lending to the real estate sector, Singh said he could not comment on the tight credit policy adopted by banks following the global fiscal distress.
"But from an industry perspective, we certainly would like to see more liquidity trickling back into the property sector," he said.
"I think for that to happen, one of the major things that need to be considered by financial institutions is how to lighten their load in terms of exposure to the sector. I know they might have concerns but we just need to manage this situation."
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