The prime office markets in the UAE remained tenant favourable in the first quarter with the average rents across Dubai seen at just over AED200 per sq ft, thus hitting their lowest level since Q3 2012, according to property expert Knight Frank. 

 

However, the key market of Abu Dhabi witnessed a 3.9% jump in rental rates over Q4 last year, stated Knight Frank in its Dubai & Abu Dhabi Office Market Updates for Q1 2021 report.

 

The average prime rents across Dubai currently stand at just over AED200 per sq ft, 4.2% lower than Q1 2020 and the lowest level recorded since Q3 2012, whilst average office rents Citywide wide fell by 7.7%, year-on-year, said the report.

 

According to Knight Frank, Grade A (AED 120 per sq ft) and Citywide (AED 96 per sq ft) rents in Dubai  fell by 9% and 8.7% respectively between Q1 2020 and Q1 2021.

 

"The fallout from Covid-19 is still being felt across the market, however there are pockets of activity emerging, with the technology-media-telecoms sector being notable active, mirroring trends in other major global markets," remarked Faisal Durrani, Head of Middle East Research at Knight Frank.

 

"The increased level of activity stems from rising nation-wide business confidence, driven by the world-leading vaccine roll-out programme that is allowing a semblance of normality to return," stated Durrani.  

 

"Still, this doesn’t take-away from the fact that the pandemic has fundamentally altered occupier mindsets, with occupational strategies still under review, with a view to factoring greater remote working going forward," he added

 

Looking ahead, Knight Frank reports that the trends of consolidation of space and flight to quality are likely to continue. 

 

Occupiers are, where possible, looking to take advantage of weaker market conditions to upgrade occupational space whilst being mindful of increasing total spend. Landlords are expected to remain flexible in order to retain and attract occupiers, said the report. 

 

On the Abu Dhabi office scenario, Knight Frank said as of Q1, the average prime office rents were recorded at AED 1,725 per sq m, 3.9% up on Q4 2020, meanwhile, average Grade A office rents stood at AED 1,192 per sq m at the end of Q1, -0.9% down on Q4 2020, while Citywide rents fell to AED 897 per sq m, from almost AED 940 per sq m during Q4 2020. 

 

"Marketwide vacancy in Abu Dhabi’s office market registered at 21.7% at the end of Q1 2021, down slightly from 21.9% at the end of last year, meanwhile Prime office space registered a vacancy rate of 25.6% at the end of Q1 2021, down from almost 29% in Q1 2020," stated Durrani. 

 

"Grade A offices currently have a vacancy rate of 22.3%, while 15.4% of Grade B space across the city is vacant," he noted.

 

Durrani said activity in Abu Dhabi’s occupier market was expected to remain subdued with new take-up likely to continue being driven by public sector entities and smaller domestic businesses. 

 

"The latter are looking to capitalise on the weaker conditions by consolidating operations, or upgrading offices, where possible, but average space requirements remain relatively small amongst this cost-conscious cohort, who will find Prime rents remaining firm," he added.-TradeArabia News Service