Office rents in Abu Dhabi are expected to drop further in the next six months in single digit figures, as new commercial developments continue to further swell supply, a new report said.
Demand for offices in the capital is anticipated to improve over the next 12 months, as the private sector sees improving conditions amid continued government investment, but supply will continue to overtake new demand, according to the Abu Dhabi Office and Residential Marketview Q3 report.
“Despite the sustained downward movement of rental rates, the rate of decline is slowing and is now at its lowest level since the start of the property slump,” the report stated.
Average rents in the emirate fell by two percent in the third quarter over the previous quarter while prime office rents in Abu Dhabi’s premium developments were flat at Dh1,600 to Dh1,900 metre square per year.
In the residential market, average rents have dropped six percent compared in the third quarter compared to the previous quarter with some properties seeing static rents and others having a decline of 3 to 9 per cent, the report showed.
“At this point in the development cycle, we see no immediate end to this trend with better quality inventory entering the market, adding pressure to ageing and/or inferior units,” it stated.