Abu Dhabi office rents likely to rise over next 12 months: Knight Frank
Office rents likely to face upward pressure as current supply is not expected to fully meet demand
Office rents in Abu Dhabi are likely to see upward pressure over the next year as little prime or ‘Grade A’ supply is due to enter the market, according to Knight Frank.
According to a report by the property consultancy, there has been little change in headline office rents in the first half of the year. While prime office rents in the capital edged up to AED1,900/sqm in H1, rental values for ‘Grade A’ shell and core office space remained steady at AED1,400/sqm.
There were fewer enquiries for office space in the first six months, possibly due to uncertainty stemming from lower oil prices, Knight Frank said. The main demand was for offices ranging between 200-500sqm in size, accounting for half of the total enquiries.
Demand for office space was led by the financial services (22%), leisure and hospitality (15%) and professional sectors (15%). Demand has also increased from the engineering and construction sector, in line with rising infrastructure construction activity.
Looking ahead, prime and ‘Grade A’ office supply currently under construction or being delivered to the market is not expected to fully satisfy present market demand, in terms of pricing and location, Knight Frank said.
“The Abu Dhabi office market remains subdued in terms of new commercial premises under development. The current supply does not solely meet current occupier demand; however, we are still witnessing consolidation of operations and flight to quality,” said Matthew Dadd, Abu Dhabi commercial leasing at Knight Frank.
Prime office supply due to be delivered or currently vacant includes the Al Hilal Bank building, Al Maryah Island and park of ADGM Square.
