Abu Dhabi has seen office space enquiries fall during the first half of 2015 as lower oil prices fuel uncertainty, according to a new report by Knight Frank.
Its Abu Dhabi Office Research Report said the main demand for offices during the first six months of the year was for between 200 sq m and 500 sq m (50 percent of total inquiries).
The report added that demand was led by the financial services (22 percent), leisure/hospitality (15 percent) and professional sectors (15 percent).
Over the same period, the number of enquiries from the engineering and construction sector increased, reflecting growing demand stemming from rising infrastructure construction activity, Knight Frank said.
The report said that there had been little change in office headline rents in the first half of this year but added that rents are likely to see upward pressure in the next 12 months as little Prime or Grade A new office supply is due to be delivered to market.
Prime office rents edged up in Abu Dhabi in the first six months of 2015 to AED1,900 per sq m, while rental values for Grade A shell and core office space remained steady at AED1,400 per sq m.
Knight Frank said it expects that Prime/Grade A supply under construction or being delivered to the market does not fully meet current market demand, in terms of price point and location.
It added that further spending to improve the city's infrastructure should make it a more attractive destination for private investment in the medium to long-term. In turn, this is likely to have positive implications for office demand in Abu Dhabi.
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."For all the latest GCC news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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