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The Abu Dhabi office market was one of the least volatile in the UAE in recent months, remaining mostly flat at Dh1,150 per square meter annually, with prime and secondary office rental rates witnessing minimal movement, according to a CBRE report.
Its total office supply remained constant as there were no major handovers, putting vacancy rates at a stable level. But with the amount of projects in development, the occupancy rates are expected to improve alongside sale and leasing rates. Industry experts predict office space in prime locations will outperform the wider market. Conversely, rental rates for inferior properties will drop as competition rises.
In comparison, Sharjah's office market is set to see prices climb due to a rise in demand for prime office space. According to the Sharjah Winter 2014 Commercial Market Outlook report by real estate consultants Cluttons, the availability of sufficient parking space remains a key factor in influencing an area's rental rates.
In Q3 2014, rents across Sharjah remained steady, with the prime area of Al Majaz maintaining its high price tag at Dh75 per square foot. As a result of the flat rents, there had been a sudden drop in rental rates in Grade A buildings in Al Majaz as landlords began to lower their rents. Compared to 2013, rents in Al Majaz were almost 12% lower in 2014. In contrast, the peripheral areas had increased rents by over 18% throughout 2014.
Office rents in Dubai continued to rise in 2014, with rents at the Central Business District (CBD) increasing by 25% year-on-year, according to CBRE. With CBD facing reducing availability of high quality office space, vacancy rates have steadily been reduced to less than 16% compared to the 40% market average. Average prime office rental rates hit Dh1,884 per square meter per annum and looked only to increase in the short term.
Secondary office locations also saw an increase, from Dh924 per square meter per annum in Q2 2013 to Dh1,148 per square meter per annum in Q2 2014. Limited office space in key areas means that demand is likely to overflow into adjacent areas, especially those with good transport links.
• Dubai office rents rose in 2014, with CBD posting higher growth
• Sharjah rents steady in 2014 with Al Majaz having high price tag
• Abu Dhabi had no handovers, resulting in stable vacancy rates
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Source: Nicholas Baker, Special to Properties
The writer is a freelancer