Abu Dhabi has experienced a thriving first quarter in both the office and industrial sectors, driven by steady economic growth and strategic investments, a latest industry report said.
The demand for commercial office space has been robust, with Grade A office assets such as Abu Dhabi Global Market (ADGM) and International Tower achieving around 95 percent occupancy, the report by Savills said.
ADGM alone recorded a 32 percent increase in operational firms and a 22 percent rise in the workforce in 2023, reflecting the growing demand for office spaces, it said.
Key locations such as Maryah Island, Capital Centre, Masdar City, and Al Raha continue to attract interest due to their superior connectivity, infrastructure, and build quality.
Savills said Abu Dhabi’s office market faces a shortage of Grade A assets, with high occupancy rates driving rental increases.
“However, over 90,000 sqm of new office space is expected by 2026, with major projects like The Link Masdar City and HB Office Tower in the pipeline,” the report said.
Additionally, ADGM’s expansion into Al Reem Island and new developments on Saadiyat Island are set to meet the rising demand for prime office spaces by 2027.
“Overall, rental growth across micro-markets was recorded at one percent quarter-on-quarter, with select prime locations seeing a 7 percent rise year-on-year,” it said.
Industrial rental market in Abu Dhabi
Savills said Abu Dhabi’s industrial sector also continues to thrive, bolstered by strategic initiatives such as the Industrial Sector Strategy and the ‘Make it in Emirates’ initiative.
The non-oil economy demonstrated robust growth of 9.1 percent, contributing to a 3.1 percent increase in the real GDP in 2023, it said.
“Small and Medium-sized Enterprises (SMEs) are pivotal in this growth, making up approximately 98 percent of businesses and contributing over 42.8 percent to the non-oil GDP,” the report said.
“Abu Dhabi is positioned as a global manufacturing hub, and the robust growth in the non-oil economy and the increasing demand for top-tier industrial and logistics facilities underscore the emirate’s commitment to fostering a business-friendly environment,” Michael Fenton, Director of Industrial & Logistics at Savills Middle East, said.
Rental rates for industrial spaces in Abu Dhabi rose by two percent quarter-on-quarter, with high-specification assets in ICAD 1 and KEZAD experiencing a significant 14 percent year-on-year increase, the report said, adding that buildings with advanced features like temperature control continue to command premium rents.
The demand for industrial and logistics space remains strong, particularly in locations like ICAD, Mussafah, and KEZAD.
The sector is set to grow further with ongoing construction projects adding nearly a million sq ft of space in Musaffah, ICAD, and Al Markaz.
KEZAD Group is investing AED621 million in developing 250,000 sqm of warehousing capacity by the end of 2025.
Aldar is also expanding its logistics asset, ADBH, by 33,000 sqm, with full occupancy expected by major firms such as Etihad and Mubadala, Savills said.
Follow us on
