Sunday, July 08, 2007

Commercial space much in demand in Abu Dhabi

The density of Abu Dhabi is almost five times that of the global average, and more than doubles that of Dubai, and hence finding a suitable office space is getting extremely difficult in Abu Dhabi, say new reports.

The HSBC Global Research has stated that "The office market in Abu Dhabi is tighter than the residential market, with ninety nine percent occupancy rates. Even the vacancy rates are as low as one percent in comparison to the global average of nine percent and two percent in Dubai."

Also, apart from quality of supply being low, most office buildings require renovation. According to Colliers International, approximately 744,580 Sq.mts of office space is likely to enter Abu Dhabi market by 2012, doubling the existing supply.

As per reports though the occupancy rates of Dubai and Abu Dhabi are ninety nine percent and ninety eight percent respectively, the office density is more than double in Abu Dhabi when compared to Dubai.

The Bank expects the upward trend in rents and prices to continue until the demand and supply meets equilibrium. According to Colliers International, office rents in Abu Dhabi have increased by more than thirty percent in comparison to 2006.

Though the rental rates of Dubai and Abu Dhabi seem to be moderate, the rental yields are on the higher side, at 7.8% and 8% respectively.

According to HSBC, however, the rents are expected to stabilize over the long term, though prices continue to rise until yields fall closer to the US risk-free rate, and thereafter, the prices may stabilize.

HSBC says "Similar to what has been observed earlier for office space, rental rates though comparatively cheap, yields are on the higher side. This trend could be noticed in most emerging markets, though the opposite is true in developed markets."

1 comment:

makati office space said...

I never would've imagined Abu Dhabi to be so packed. Maybe they should consider expanding the city and building more office or commercial spaces.