DUBAI: As demand for prime space intensifies, the UAE's office markets are recovering with rents in some parts of Dubai and Abu Dhabi returning to pre-COVID levels or showing resilience.
An analysis by global real estate consultancy Knight Frank showed that five out of 27 locations in Dubai have experienced a rent recovery to pre-pandemic levels. While, in Abu Dhabi, it added that the best buildings are showing resilience as they have managed to retain their rental values.
Knight Frank also cited the lack of new prime stock as one of the factors contributing to the rise in rents in some markets.
Head of Middle East Capital Markets and Occupier Services & Commercial Agency at Knight Frank, Andrew Love highlighted that “there is a very limited supply pipeline of high-quality office stock in Dubai, which is where the attention of businesses remains centered.”
Knight Frank observed that office rents in all of the main submarkets that it tracks in Abu Dhabi have stayed stable in Q1, while locations like Corniche Area recorded a 7.2-percent rise in average rents on an annualized basis, reaching 1,675 dirhams per square meter.
Faisal Durrani, partner — head of middle east research at Knight Frank, attributed the rental stability to the government's effective response to the COVID-19 pandemic, which “played a big part in boosting business confidence.”
“Aiding the positive economic undertone has been the recent sharp rebounding in oil prices,” he added.
Knight Frank explained that the steady office demand in Abu Dhabi is in part linked to the stable, but high office rents, which are now up to 14.5 percent higher than in 2020 in the Corniche Area.
The property consultant also observed that the serviced office sector is also expanding as a result of the seemingly permanent shift toward remote working.
“Overall, as the impact of the pandemic on Dubai’s economy abates, we are starting to see larger corporates requesting staff to attend the workplace more often,” said Durrani.
Outside of consolidation activity, it added that serviced office providers are increasingly active in the market, providing enterprise solutions to businesses that are looking for more flexible leases and plug-n-play solutions.
