Approximately 95% of premium offices, including the International Tower and Abu Dhabi Global Market, are fully occupied.

According to a recent report by real estate consulting firm Savills, Abu Dhabi has seen a surge in demand for office space, necessitating the construction of additional Grade A properties.

The UAE’s capital city continues to attract investors and foreign professionals due to the expanding private sector, increased business confidence, and foreign direct investment, which has increased demand for commercial office space, the survey found.

The study stated that the largest obstacle facing the capital’s office market at the moment is the absence of Grade A properties, but it also mentioned that efforts were already underway to build additional high-end office space.

” Around 90,000 square meters will be constructed in the city by renowned developers until 2026 for projects like Masdar City Square, The Link Masdar City, and the HB Office Tower from Aldar.,” according to Savills.

“Due to the high demand, the majority of these upcoming projects have recorded healthy pre-commitment rates.”

According to the Savills analysis, well-known destinations like Maryah Island, the Capital Centre, Masdar City, and Al Raha are what are driving the demand for office space in Abu Dhabi.

It further stated that notable Grade A office buildings like the International Tower and Abu Dhabi Global Market are running at roughly 95% occupancy.

Abu Dhabi’s GDP expanded 3.1% annually last year, reaching its highest point in ten years, driven by strong non-oil sector expansion and ongoing efforts to diversify the economy.

Despite difficulties and changes in the global economy that had an impact on every sector, the emirate’s gross domestic product for the 12 months ending at the end of December was Dh1.14 trillion ($310.63 billion), marking its highest performance in terms of value in ten years, according to Abu Dhabi Media Office.

According to the media office, which cited data from the Statistics Centre Abu Dhabi, “significant strides in the construction, finance and insurance, and transportation and storage economic activities” contributed more than 53% of the total GDP, and this resulted in the non-oil economy of Abu Dhabi growing by 9.1% year over year.

Abu Dhabi’s economy has continued to grow strongly even since the downturn caused by Covid. With an annual growth rate of 9.3%, the emirate’s GDP reached Dh1.1 trillion in 2022, the highest growth rate in the Middle East and North Africa.

The consultancy stated that the government and semi-government sectors, engineering and consulting firms, banking, financial services, and insurance companies led the demand for these locations.  The concentration of well-laid infrastructure, higher build quality, restricted availability, and superior connection relative to other micro-markets are the main reasons for the popularity of these locations, according to the consultancy

In neighborhoods like Corniche, Khalidiya, and Abu Dhabi Downtown, the demand for Grade B properties is being driven by businesses that prefer high-performing assets at reduced rental prices.

Demand for Grade B buildings is influenced by a number of variables, such as building condition, facilities provided, and parking alternatives.

According to Savills, the expansion of already established businesses and the influx of new players in the market drive the leasing activity for office space in Abu Dhabi.

According to the survey, among the notable businesses that occupied space in the first quarter of this year were Morgan Stanley, Infiniti Capital, and H2O, a company based in Korea.

According to the report, “the government announced a tenfold expansion of the financial free zone’s jurisdiction in May 2023, adding Reem Island to the existing jurisdiction and expanding its area to about 1,438 hectares to support the growth of its financial sector.”

“To meet the increasing demand for premium Grade A office spaces, Aldar has announced the construction of the ADGM office tower, which will follow the expansion to Al Reem Island, and a new business park on Saadiyat Island, which is scheduled for completion by 2027.”

Rent has increased overall, further rising demand and the scarcity of premium Grade A office space.

Rates went up by 1% every three months. However, certain assets are more valuable than others because of their position and ease of access.

In the first quarter, the central business district saw an annual increase of 7%. Major office towers like the WTC Office Tower, ADGM, and Etihad Tower are located in this region.

According to Savills, ADGM offers the highest rentals in the market, at over Dh2,600 per square meter, with a 30% yearly growth in rental income.

A different Savills research stated that the growth of the non-oil industry is driving up demand for industrial and logistics/warehousing space in Abu Dhabi.

Small and medium-sized businesses have been increasingly interested in light industrial units because of their affordability and scalability.

According to the poll, “Warehousing occupancy levels have increased dramatically throughout the city as the government actively markets the nation as a crucial hub for exports and re-exports.”

The main sectors driving demand in Abu Dhabi include manufacturing, the oil and gas industry, and third-party logistics.

According to Savills, rising domestic consumption is also fueling the e-commerce industry’s rapid expansion, with shorter delivery times encouraging the adoption of more compact units closer to urban areas.

It further stated that the Industrial City of Abu Dhabi (ICAD), Mussasfah, and Khalifa Economic Zones Abu Dhabi (Kezad) saw the most leasing activity in the first quarter.

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Source National News 27 May 2024

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