JEDDAH — The UAE continues to cement its position as a regional financial center and a hub for trade, transport and tourism, with Dubai maintaining the lead in these areas, while Abu Dhabi is making strides as part of its 2030 vision, Knight Frank said in its “Abu Dhabi Office Research Report” for the first half of 2015. The latter witnessed lower office enquiries in H1 2015, which may be due to uncertainty stemming from lower oil prices, the report noted, with over 50% of enquiries were for offices sized between 200 sqm and 500 sqm. It was noticed that fitted accommodation continued to be an important requirement for those enquiring about smaller offices less that 250 sqm). Against this backdrop, Abu Dhabi has seen further spending to improve its infrastructure, which in the medium to long-term should make it a more attractive destination for private investment. In turn, this is likely to have positive implications for office demand, the report pointed out. Matthew Dadd, Abu Dhabi commercial leasing, Knight Frank, said “the Abu Dhabi office market remains subdued in terms of new commercial premises under development. The current supply does not solely meet current occupier demand, however, we are still witnessing consolidation of operations and flight to quality.” However, the report revealed that the number of enquiries from the engineering and construction sector increased in H1 2015 – reflecting growing demand stemming from rising infrastructure construction activity. The average size requirement for this sector remained steady at around 600 sqm. This is larger than most other sectors and is being driven by international companies' requirements for office space. Moreover, the leisure/hospitality and professional sectors combined accounted for 30% of total demand in the first six months of this year. Headline office rents saw little change in H1 2015. Over the next 12 months, rents are likely to see upward pressure as little prime or grade A new office supply is due to be delivered to market. The report noted that prime office rents edged up in Abu Dhabi in the first six months of this year to AED1,900 per sq m. Meanwhile, rental values for Grade A shell and core office space remained steady at AED1,400 per sqm. With the exception of one or two developments, there is a shortage of prime/grade A office space available which meets occupiers' needs in Abu Dhabi. Prime office supply due to be delivered or currently vacant includes Al Hilal Bank building, Al Maryah Island and ADGM Square (FZ). However these are unlikely to meet current market needs in terms of both price point and location. The newly renamed Abu Dhabi Global Market Square (ADGM) went ‘live' last June 14. The ADGM is now accepting applications for the registration of non-financial services companies, private limited organizations and branches of foreign businesses. Currently, the report said the registration of leases and charges is not yet possible through the ADGM, but this is expected to be possible by the end of this year. The Four Seasons remains on track to open in H1 2016. This should provide additional footfall and retail opportunities at Al Maryah. Other developments in focus are the Memorandum of Understanding between the ADGM and the Abu Dhabi Department of Economic Development (DED) which covers many aspects including the registration and protection of company names and licenses, both onshore and within ADGM. The 230,000 sqm Al Maryah Central retail mall which will link to adjacent The Galleria – started ground works in November 2014. It is expected to open in 2018 after having gained detailed project approval from the Urban Planning Council in the first half of this year. Besides, plans have been outlined to build four new bridges to connect Abu Dhabi Island and Al Reem Island. Once complete, this will make Al Maryah island a more accessible location and in turn should increase its appeal among businesses. — SG
