Office rents are likely to see an upward trend in the next 12 months following a slow first half witnessed in 2015, according to a report by Knight Frank, a leading privately owned global property agency and consultancy.

The report highlights a lower number of office space enquiries in the first six months of 2015, which may be due to uncertainty stemming from lower oil prices, said the Abu Dhabi Office Research Report for the first half of 2015.

The main demand for offices was between 200 sq m and 500 sq m (50 per cent of total inquiries) while demand was led by the financial services (22 per cent), leisure/hospitality (15 per cent) and professional sectors (15 per cent), it added

Over the same period, the number of enquiries from the engineering and construction sector has increased, reflecting growing demand stemming from rising infrastructure construction activity.

As per the report, little change in office headline rents has been witnessed in the first half of this year but rents are likely to see upward pressure in the next 12 months as little Prime or Grade A new office supply is due to be delivered to market.
 
Prime office rents edged up in Abu Dhabi in the first six months of 2015 to Dh1,900 ($517) per sq m, whilst rental values for Grade A shell and core office space remained steady at Dh1,400 ($381) per sq m.

Going forward, Knight Frank expects that Prime/Grade A supply under construction or being delivered to the market does not fully meet current market demand, in terms of price point and location.

Prime office supply due to be delivered or currently vacant includes Al Hilal Bank building, Al Maryah Island and part of ADGM Square (FZ) respectively.

Additionally, commenting on the wider picture of real estate in the city, the report pointed out to the ongoing process of diversification where the UAE continues to cement its position as a regional financial centre and a hub for trade, transport and tourism.

Further spending to improve the city’s infrastructure should make it a more attractive destination for private investment in the medium to long-term. In turn, this is likely to have positive implications for office demand in Abu Dhabi, added the report

For this edition, the report had Al Maryah Island as its market focus with a number of observations.

Matthew Dadd, Abu Dhabi commercial leasing, 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,” he added. – TradeArabia News Service