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Office space enquiries in Abu Dhabi dropped in the first six months of the year, likely due to uncertainty stemming from lower oil prices, according to Knight Frank’s Abu Dhabi Office Research Report. The main demand was for office sizes of 200-500 sq m, accounting for half of the enquiries, from financial services firms (22 per cent), leisure/hospitality groups (15 per cent) and professional services firms (15 per cent).
Over the same period, the enquiries from the engineering and construction sector increased, reflecting growing demand stemming from rising activity. There was little change in office headline rents, but the report notes that rents are likely to see upward pressure in the next 12 months as only a few grade A new office supply is due to be delivered.
Prime office rents edged up in Abu Dhabi to Dh1,900 per sq m, while rental values for grade A shell-and-core office space remained steady at Dh1,400 per sq m.
Going forward, Knight Frank says prime and grade A supply under construction or being delivered will not fully meet current market demand in terms of price and location. Prime office supply due to be delivered or vacant includes Al Hilal Bank building, Al Maryah Island and part of ADGM Square (FZ).
“The Abu Dhabi office market remains subdued in terms of new commercial premises under development,” said Matthew Dadd, Head of Abu Dhabi Commercial Leasing at Knight Frank. “Supply does not solely meet current occupier demand, however, we’re still witnessing consolidation of operations and flight to quality.”
Source: Property Weekly