UAE office space to 'virtually double' by 2014 - study

Office space in Abu Dhabi and Dubai is set to “virtually double” over the next three to four years, according to Landmark Advisory’s latest report.

Commercial oversupply will continue to grow, with up to 45.9 million sq ft of empty office space available across both emirates by 2014, the Q3 2010 Dubai and Abu Dhabi Real Estate Report states.

“New commercial properties coming online will infuse the market with higher quality office supply and drive down office rents, making both cities more attractive centres for business,” said Jesse Downs, director of Research & Advisory Services at Landmark Advisory.

“The market now needs stimulus initiatives to leverage the improved affordability and to encourage the growth of industries that will diversify the local economies and fill the expanding vacancies projected over the next three-to-four years.”

Sale prices in Abu Dhabi’s commercial office segment remained stable during the second quarter of this year, while rents have fallen by 10 percent since March, the report shows.

Offices rents in Abu Dhabi’s City Centre and Tourist Club Area have shown the biggest declines, in some instances falling up to 20 percent, Landmark said.

“Stagnant sale prices are attributed to virtually non-existent transaction volumes and sticky asking prices,” said Downs. “In the leasing market, office rents will continue to decline on the back of rapidly expanding office supply; in 2010 alone there will be a 32 percent increase in supply.”