Abu Dhabi – Decypha: Office rents in Abu Dhabi are expected to fall by about 5% this year, according to a research by property broker CBRE.
Prime rentals currently average around Dh1,800 a square meter according to the report although landlords are offering longer rent-free periods as incentives to tenants, ultimately resulting in lower occupational costs for occupiers.
“No imminent recovery in performance (is) anticipated,” said Matthew Green, Head of Research and Consulting UAE at CBRE M.E to Gulf News. “Abu Dhabi is currently experiencing widespread deflation of rental rates for non-prime assets, driven by softening demand fundamentals, rising inventory levels and vacancy rates.”
The drop in rental prices is believed to be due to the mergers of some of the capital’s largest companies, and lay-offs in the oil and gas sector, according to The National. Some of the company mergers include Mubadala’s with Ipic and National Bank of Abu Dhabi’s merger with FGB.
"The full effects of the oil price slump on the Abu Dhabi office market are not visible as yet," said Green. "Office markets tend not to move very quickly as tenants take long leases. However, we are seeing companies in the capital downsizing and attempting to sublease their excess space. We can expect to see further declines in rentals during the course of 2017.”
Office rents in Abu Dhabi had fallen to their lowest in more than eight years according to the property broker Asteco with office rents 72% lower than their market peak in late 2008.
By Decypha News Editorial Team
