In the second half of last year, a strong increase in demand from the government sector helped to keep market-wide office rents stable in Abu Dhabi. However, over the same period, rental values for Grade ‘A’ shell and core offices fell by 5% year-on-year to Dhs1,180 per m2 as the removal of the rent cap reduced occupier demand due to associated uncertainties.
Matthew Dadd, Associate Director Abu Dhabi commercial, noted that, ”nearly half of total enquiries recorded in the second half of 2013 were for space sized between 100-500m2. But a shortage in availability of 100-250m2 CAT A office space meant that activity levels within the 100-500m2 bracket were unusually low. Another 37% of enquiries were for space sized between 0m2 and 100m2”.
The leisure/hospitality (16%), government (15%), general trading (10%) and oil & gas (9%) sectors accounted for half of total occupier demand in the second half of 2013. Meanwhile, the ‘other’ sector accounted for nearly one-fifth of all demand.
Following a sharp rise between 2012 and 2013, the market-wide vacancy rate is expected to see a smaller increase, to 36%, this year. This is predicated on the fact that, while around 600,000m2 of new space is due to be completed in 2014, a large proportion of this has already been pre-let. That in turn suggests that the vacancy rate is unlikely to see as large a rise as it would have otherwise.
For further information, please contact:
Nicola Milton, Marketing & PR, Knight Frank, +971 (0) 56 6116 368
Matthew Dadd. Associate Director, Abu Dhabi commercial Knight Frank, +971 (0) 56 6146 087
Khawar Khan, Research Manager, Knight Frank, +971 56 1108 971