The tough macroeconomic environment has forced oil and gas companies and government entities in Abu Dhabi to continue to restructure and cut budgets, negatively impacting demand for office space, a new report has showed.
JLL's Abu Dhabi Q2 Real Estate Market Overview said job losses in the UAE capital continue, with Abu Dhabi banks cutting over 900 jobs in the past 12 months, according to the Statistics
Centre of Abu Dhabi (SCAD).
The report said Abu Dhabi firms are hiring fewer employees, with online recruitment activity declining 47 percent in the year to March compared to the same period last year, according to the Monster Employment Index.
JLL said requirements for additional office space are expected to remain limited throughout 2017, due to the reduction in government spending.
However, it added that supply remains under control, and Grade A vacancy remains relatively low, offsetting the negative impact of reduced demand.
No major completions took place during Q2, with total office stock remaining at approximately 3.5 million sq m. A further 170,000 sq m is expected to enter the market by the end of 2017 with the delivery of ADIB HQ on Airport Road and Leaf and Omega Towers on Reem Island.
The report dsaid Grade A and B office rents remained stable at AED1,760 per sq m and AED1,030 per sq m respectively over Q2, in spite of the reduction in demand across various sectors.
JLL analysts said the delivery of further office space throughout the year at a time of weak demand, is expected to push up vacancy rates from their current level of 22 percent.
Rents are likely to remain unchanged for Grade A space, but decline elsewhere, they added.For all the latest real estate 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.
Subscribe to Arabian Business' newsletter to receive the latest breaking news and business stories in Dubai,the UAE and the GCC straight to your inbox.