SUPPLY: UPCOMING OFFICE SUPPLY FOR 2024 AND 2025 FOCUSED ON PRIME AND GRADE A SPACES
Significant new developments delivered to the office market include Al Raha Beach Office Tower in Al Raha Beach, which delivered 87,705 GLA sq. ft. of Grade A office space in Q3 2024. Office buildings within Capital Centre, Al Raha Beach, and Danet contributed a combined 333,684 sq. ft. of secondary market office space, and Masdar City Square is expected to be handed over by the end of 2024. Looking ahead, the SAAS Business Tower on Reem Island, scheduled for completion in Ql 2025, will offer 129,168 sq. ft. of Grade A office space, while Yas Place on Yas Island will introduce 266,131 sq. ft. of new Grade A office accommodation.
DEMAND: KEY DEMAND DRIVERS - BANKING, FINANCIAL, OIL &GAS SECTORS DOMINATE
Abu Dhabi has seen a significant diversification in demand in the last few years. The Banking and Financial sectors remain dominant, contributing to 27% of overall demand, followed by the Oil and Gas sector at 21%. There is a notable demand for medium-sized office spaces, with 35% of inquiries for spaces between 2,000 to 4,500 sq. ft., followed by 30% for offices between 4,500 to 6,500 sq. ft. Smaller offices under 2,000 sq. ft. account for 10% of inquiries, while larger office spaces see fewer inquiries. Specifically, 15% of inquiries are for spaces between 6,500 to 10,000 sq. ft., 7% for 10,000 to 20,000 sq. ft., and only 3% for offices over 20,000 sq. ft.
PRICING: PRIME AND GRADE A PROPERTIES IN HIGH DEMAND
Abu Dhabi's total office market stock is currently over 43.5 million sq. ft., with Prime and Grade A stock accounting for nearly 30% of the total stock while the Grade B and C category account for nearly 70% of the remainder of the stock. Leasing rates for Prime office buildings range between AED 180 to AED 260 per sq. ft. annually, depending on size and location. Similarly, Grade A offices are experiencing strong demand, with occupancy levels hovering around 95% and annual rents ranging from AED 150 to AED 180 per sq. ft.