Dubai: With significant new supply due in Abu Dhabi’s office space in the medium tern, tenants can expect to have it their way. It remains, in all probability, the only category within the UAE’s property market where tenants could be said to have an edge over landlords.
Parking space being at a premium, any office location that can provide for it in ample terms will have an edge. “Submarkets with good transport links, such as Khalifa Park and the Capital Centre, have emerged as activity hot spots,” said a Cluttons report.
“Professional and institutional landlords are wary of market conditions and have demonstrated a greater amount of flexibility around lease terms in recent months as occupancy rates take precedence over rental income. There does of course remain a small group of stubborn landlords whose expectations remain out of kilter with market realities. Increased void periods are likely for such stock as occupiers hone in on what are perceived to be ‘good deals.’”
Which makes for a tenant’s market, in other words.
In many ways, the situation in Abu Dhabi’s office space is similar to what Dubai’s had experienced until its confirmation as the host city for the Expo 2020. Post the November announcement, there has been a marked upswing in demand for offices, and more so for those properties, which can offer large-format spaces. Even then, developers have not been rushing in with further new projects.
“Caution is the watchword for developers when it comes to new office stock — they could do better by creating hotel serviced apartments and immediately start generating revenues from it,” said a senior executive at a leading local developer.
“Launching an office project now could mean longer waiting period for yield generation as there is no guarantee over demand levels. ”
