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According to the Statistics Centre-Abu Dhabi (SCAD), inflation for Q1 2017 remained low at 2.2%.
Credit ratings agency Standard & Poor’s has forecasted that Abu Dhabi’s budget will return to a small surplus in 2017, after recording a deficit during 2016 amidst challenging economic conditions and low oil pricing.
Abu Dhabi has officially reinstated the rent cap system, although with the slowdown in the market and overall residential demand, the regulation is unlikely to have a significant impact in the short term.
Brent Crude Oil averaged around US$54/barrel during Q1 2017, up by 59% from the Q1 2016 average of US$34/barrel.
Prime offices registered average rentals of AED1,750/sqm/year, 5% lower than at the same point last year. Secondary office rentals continued to slide, reaching AED AED935/sqm/year, translating into an 8% drop year-on-year.
According to figures from STR, the hospitality market has witnessed further declines across most performance metrics on a year-to-date basis, with occupancy rates down 4.3% year-on-year, ADR’s down 4.4% and RevPAR down 8.4%.
The Emirates NBD UAE Purchasing Managers’ Index (PMI) report, which measures the health of the country’s non-oil private sector, indicated an improving business environment during the first two months of 2017. The index rose from 55.6 in January to reach 56.0 in February, above the long term average of 54.5. The reading indicates a positive shift in sentiment in recent months, along with higher output and job creation.
According to Sheikh Ahmed bin Saeed Al Maktoum, the chairman of the Economic Development Committee in Dubai, the Emirate is expected to grow by around 3.1% during 2017, up from 2.7% in 2016. This is lower than the IMF forecasted 3.6% in 2017, up from 3.3% in 2016.
Average residential rental rates in Dubai have continued to decline in early 2017, falling by around 1% quarter-on-quarter, driven by an increase in the number of available housing options and more constrained demand.
According to STR Global, average hotel occupancy rates in Dubai rose by 3.8% during the first two months of the year, as compared to the same period last year. However, ADR’s and RevPAR’s remain in negative territory.
International ratings company, S&P has reaffirmed Ras Al Khaimah’s (RAK’s) long-term foreign and local currency Issuer Default Ratings (IDR’s) at ‘A/A-1’ and has also categorised the Emirate’s outlook as stable.
RAK’s hospitality market has outperformed the wider UAE tourism industry by recording a 10.9% increase in full year visitor arrivals and a 9.8% growth in the average occupancy rate, taking the annual occupancy to 71%.
Hotel revenue rates experienced positive growth, with a 5.5% increase in average RevPAR’s across the Emirates hospitality properties.
Average residential rental rates are starting to edge towards stabilisation, with just a minor 1% decline recorded during the quarter, taking the full year drop to 4%.
During June 2016, Qatar’s inflation rate was posted at 2.5%, the lowest since the end of 2015, although, according to the Ministry of Planning Development and Statistics (MDPS), inflation is expected to pick up to around 3.4% during 2016 overall.
As per the Qatar Economic Outlook, the country is poised to grow at around 3.6% growth (real terms) during 2016 – 2018. This is supported by continued public spending, private construction activities and sustained population growth.
Prime office rentals have declined by an average of 6% over the last six months and 8% year-on-year. This reflects the emergence of weaker demand fundamentals from government entities and oil and gas companies.
Average residential rentals have declined by around 2% over the last six months and 4% year-on-year. However, prime properties in locations such as Pearl Qatar and other individual properties have seen more significant declines during this period.