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Dubai: With limited new — and sizeable — supply in the pipeline, developers and landlords with existing office space in Abu Dhabi can expect to get themselves some breathing space. This would be enough for those with Grade A offices to fill them up with tenants.
Prime office rents remained steady in H2-15 at Dh1,850 per square metre, whilst rental values for Grade A shell and core office space remained steady at Dh1,250 per square metre, according to the latest update from the consultancy Knight Frank.
Look back: Abu Dhabi's prime office rents pick up
“Grade A and prime supply remains subdued, which will be important for landlords to maintain headline rents,” it reports. “There are limited new developments under construction and those under construction could see some further delay in completion.”
Emerging high-end locations could be the beneficiary. The Knight Frank report notes that there are 150,000 square metres of vacant office space available on Al Maryah Island and falling within the jurisdiction of Abu Dhabi Global Marketplace.
Most active sector
As of now, demand for offices is led by units sized between 100 and 500 square metres, ‘with over 75 per cent of enquiries within this size range”, Knight Frank reports. “Engineering and construction continued to be the most active sector by the number of inquires, which reflects the recent growth in the number of infrastructure and real estate projects under progress. Take up was led by engineering and construction (21 per cent) and general trading (20 per cent).”
With limited fresh supply, it will give the office market sufficient time adjust to the demand softness, which was quite apparent during the second half of last year when enquiries came in lower than the norm. This was partly due to companies reviewing the impact in falling oil prices, the consequential effect on federal spending and the implications on the wider market.
See related story: Oil slump starts to hurt UAE property market
“With regional unrest and global economic headwinds, we are seeing reduced interest and take up from international companies looking to locate in Abu Dhabi.”
Landlords with older properties also need to up their game. Those that fail to meet tenants’ specifications on multiple counts will “face continued voids, as occupiers that do relocate review the market more carefully”.
Source: Manoj Nair, Associate Editor, gulfnews.com