Growth in Abu Dhabi office rental market spurs region

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The Abu Dhabi office rental market in 2008 helped propel the rate of growth across the Middle East to an average of 9. (Getty Images)

Substantial growth within the Abu Dhabi office rental market in 2008 helped propel the rate of growth in the Middle East to a 9% average, according to a new report.

But though such figures would usually spur construction activity, the wider economic environment may offset such a spike, the firm behind the report told Construction Week.

"Abu Dhabi currently has a severe shortage of Grade A space," the Office Space Across the World 2009 report, by real estate firm Cushman and Wakefield, stated.

"As demand from both international and domestic occupiers held firm, rental levels have risen by a third over the year," it said.

"Nevertheless, demand has started to focus on smaller floor-plates as occupiers look to scale down their operations."

Cushman and Wakefield research chief David Hutchings warned that despite the growth rate, economic conditions may continue to hamper construction.

"If you take a market which has seen phenomenal growth and the economic conditions remain the same then you will typically find a significant increase in developer and investor interest," he said.

"But clearly in an environment where the current and prospective economic environment is weaker then people will not automatically react to the past growth."

Office space in Abu Dhabi averaged at US $973 per m², up 33% on the previous year. Globally, only Kuala Lumpur and an area of Istanbul saw stronger annual growth.

The report also showed that Dubai climbed up the rankings from 8th to 5th place, the biggest jump of any of the city in the top ten. Office space in Dubai averaged $1179 per m² in 2008, up 7% on the previous year.

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