Ian Albert, regional director of Colliers, says the UAE capital is no different. "When you look at the Abu Dhabi market, we've got an oversupply of office space coming up. We have an undersupply of residential and yet rates are falling. And that is primarily because of the Dubai effect."
To gauge this, Colliers is working on a new survey. "We're speaking to HR and CFOs of companies and asking them what point the breach barrier is for percentage differentiation between living in Abu Dhabi and Dubai. Is it 15 per cent plus on rent? Is it 40 per cent plus ? At what point do people say for an hour-and-a-half drive they're prepared to pay that amount of money?"
He says the main driver is cost. "Quality is not as important as it used to be. In the last two years, it's more focused on the financial benefits. Three or four years ago when you were looking at office space for multinationals, 50 per cent would be financial and the other 50 per cent would be split between security, parking, amenities, and so on. These days, the financial aspect is 75 per cent of the driver.
"If Dubai stock keeps coming online, prices will stay at a certain level. So Abu Dhabi prices have to come down to get within the range of this barrier — not necessarily the same as Dubai, but within range of it — to attract people back."
asmeerdijk@gulfnews.com
