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[ABU DHABI] Abu Dhabi's property market is over-supplied and the government may take steps to address the imbalance, a senior official said on Sunday.
Prices in the UAE capital's residential sector were flat last year, after rising about 25 per cent a year in 2013 and 2014, as affordability levels became stretched and the government cut spending following the slump in oil prices.
First-quarter residential prices were little changed and property consultants CBRE last month described buying appetite and overall sentiment as weak. Rival firm JLL warned prices could come under downward pressure if transaction volumes remain low. "Today, when we look at statistics it shows there's greater supply than demand," Ali Majid al-Mansouri, chairman of Abu Dhabi's economic department, told reporters on the sidelines of a business forum. "We are studying this and if there's a big difference between supply and demand we'll meet that with innovative solutions to make sure there is a balance," he said, without elaborating on what measures the government might take.
JLL said in a report last month that the market remained stable despite the continued impact of lower oil prices and a reduction in government expenditure. "While there are some initial signs of government spending starting to return - particularly for mega tourism attractions - we expect caution to prevail," David Dudley, the head of JLL's Abu Dhabi Office said in the report. "The extent to which market stability is maintained very much depends on the return of domestic government spending in spite of a reduction in oil revenues," he said.
Unit completions are at a 10-year low, a situation JLL attributed to wariness on the part of developers, tightening liquidity and stiffer regulation. "We expect transaction volumes to remain low, which may start to put pressure on sales prices," Mr Dudley said.
Abu Dhabi plans to issue tenders for US$5.45 billion of infrastructure works over the next two to five years in what will likely be public-private partnerships, Khalifa al Mazrouei, under-secretary at the emirate's department of municipal affairs said at the same forum.