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Dubai: As the demand for prime space intensifies, UAE office markets are recovering as rents in Dubai and some parts of Abu Dhabi return to pre-existing levels or show resilience.
Five of Dubai’s 27 out of 27 locations have experienced rental recovery to pre-pandemic levels, according to an analysis by global real estate consultancy Knight Frank. In Abu Dhabi, however, the best buildings are said to be resilient as they are able to retain their rental values.
Knight Frank also cited the lack of a new prime stock as one of the factors contributing to the rise in rents in some markets.
Andrew Love, head of Middle East Capital Markets and Occupier Services & Commercial Agency in Knight Frank, highlighted that “Dubai has a very limited supply pipeline to high-quality office stock where businesses are focused”.
Knight Frank noted that office rents in all major submarket tracks in Abu Dhabi remained stable in Q1, while in places such as the Corniche area average rents rose 7.2 per cent year-on-year to 1,675 dirhams per square meter.
Faisal Durrani, Partner – Head of Middle East Research in Knight Frank, attributed rental stability to the government’s effective response to the COVID-19 pandemic, which “played a major role in building business confidence”.
“The recent significant recovery in oil prices has helped to create a positive economic downturn,” he said.
Knight Frank explained that steady office demand in Abu Dhabi was somewhat steady, but associated with higher office rents, which are now 14.5 percent higher than in the Corniche area in 2020.
The Property Consultant also noted that the serviced office sector is also expanding due to the permanent shift towards remote working.
“Overall, as the impact of the epidemic on the Dubai economy has waned, large corporate entities have begun to require staff to attend office more frequently,” Durrani said.
Outside of consolidation activity, serviced office providers are increasingly active in the market, offering enterprise solutions to businesses looking for more flexible leases and plug-in-play solutions.