Average prime office rentals in Abu Dhabi have fallen by five per cent in the second quarter compared to the first quarter of 2010, CB Richard Ellis (CBRE) said today.
In comparative terms, the global consultancy said, average prime rates are now at less than half the level registered during the peak of 2008 despite the capital being among the most expensive office markets globally.
The second quarter saw the completion of the first commercial project on Reem Island with the handover of space at Sky Tower. A number of other grade A developments will also be completed during the next 18 months, which could impact on achievable rates. This includes International Tower at the Capital Centre and TDIC/ADTA building.
As the office market matures in the capital, factors such as location, quality, facilities and services, access and visibility, will become far more prominent than they were three to five years ago when available space was scarce. Increased vacancy rates and an overall improvement in quality have provided greater opportunities for occupiers to choose suitable space.
In July, Jones Lang LaSalle said office rents in Abu Dhabi fell 12 per cent in the second quarter compared to the first quarter of 2010, with fresh supplies ratcheting vacancy rates to eight per cent.
According to CBRE, a significant number of residential units are expected to be completed during the second half of 2010, which will add to the mounting pressure on already declining lease rates. Some newer areas of the city are likely to encounter some short-term oversupply, as multiple buildings are handed over in a short period.
“Government-led projects and infrastructure developments, including the proposed railway network, nuclear plant and automobile zone, remain important demand generators and hopefully catalysts for further growth, not only in the real estate market, but for overall economic activity within the emirate,” the report said.
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