Three reasions why Abu Dhabi commercial rents remain soft
Good deals are to be had in retail, office and industrial space, according to real estate experts Core Savills
An estimated 195,000 sqm of office space is expected to be delivered in the UAE capital in 2018 Ageing stock: While Grade A office space continues to attract tenants, it’s usually at the expense of older, less flexible office space – so-called Grade B space in less popular or accessible parts of the capital. As a result, landlords are reducing prices, offering rent-free periods and even making contributions to fit-outs to keep tenants in place. This phenomenon is also seen in the warehousing and logistics space. Corporate consolidation: The last 18 months have seen companies in the capital consolidate their operations, reduce head-counts and generally tighten their belts. This has, in the words of Core Savills, created a “new equilibrium”, with the effect of pushing rates lower as per-square-foot demand recedes. Also, smaller operations are moving to newer facilities with attractive deals. Premium versus local: In the retail sector, the migration from small and perhaps older is also continuing apace. There is greater competition now for the country’s consumer spend, so retailers are tending to opt for the newer and bigger malls – ones that offer an all-day leisure destination with food and entertainment outlets. This is suppressing rents in smaller, community malls, where units are less easy to fill.