Around 600,000 sq m of new space is due to be completed this year in Abu Dhabi and a large proportion of this has already been pre-let, suggesting that the vacancy rate is unlikely to see a large rise, said an industry expert.

Following a sharp rise between 2012 and 2013, the market-wide vacancy rate is expected to see a smaller increase, to 36 per cent, this year, added Matthew Dadd, associate director Abu Dhabi Commercial at real estate services firm Knight Frank.

A strong increase in demand from the government sector helped to keep market-wide office rents stable in Abu Dhabi in the second half of 2013.

However, over the same period, rental values for Grade A shell and core offices fell by 5 per cent year-on-year to Dh1,180 ($321) per sq m as the removal of the rent cap reduced occupier demand due to associated uncertainties.

“Nearly half of total enquiries recorded in the second half of 2013 were for space sized between 100-500 sq m. But a shortage in availability of 100-250 sq m Category A office space meant that activity levels within the 100-500 sq m bracket were unusually low. Another 37 per cent of enquiries were for space sized between 0 sq m and 100 sq m.”

The leisure/hospitality (16 per cent), government (15 per cent), general trading (10 per cent) and oil & gas (9 per cent) sectors accounted for half of total occupier demand in the second half of 2013. Meanwhile, the ‘other’ sector accounted for nearly one-fifth of all demand. – TradeArabia News Service