Knight Frank office rent market updates for Q1 2021 reveals the lowest recorded rent in Dubai and an increase in Abu Dhabi Prime office rents
Knight Frank has launched its Dubai & Abu Dhabi Office Market Updates for Q1 2021, providing insights on current performance and conditions in the commercial office markets as well as commentary on future trends in those particular emirates.
According to the report, average prime rents across Dubai currently stand at just over AED 200 per sq. feet (psf), 4.2 percent lower than Q1 2020 and the lowest level recorded since Q3 2012. Average office rents citywide wide fell by 7.7 percent, year-on-year. Grade A (AED 120 psf) and citywide (AED 96 psf) rents fell by 9 percent and 8.7 percent respectively between Q1 2020 and Q1 2021.
Looking ahead, Knight Frank reports that the trends of consolidation of space and flight to quality are likely to continue. Occupiers are, where possible, looking to take advantage of weaker market conditions to upgrade occupational space whilst being mindful of increasing total spend. Landlords are expected to remain flexible in order to retain and attract occupiers.
According to Faisal Durrani, Head of Middle East Research at Knight Frank, the fallout from Covid-19 is still being felt across the market, however there are pockets of activity emerging, with the technology-media-telecoms sector being notable active, mirroring trends in other major global markets.
In Abu Dhabi, market wide vacancy in Abu Dhabi’s office market registered at 21.7 percent at the end of Q1 2021, down slightly from 21.9 percent at the end of 2020, meanwhile prime office space (recorded at AED 1,725 per sqm) registered a vacancy rate of 25.6 percent at the end of Q1 2021, down from almost 29 percent in Q1 2020. Grade A offices (currently at AED 1,192 psm) have a vacancy rate of 22.3 percent, while 15.4 percent of Grade B space across the city is vacant.
Durrani concluded, “Activity in Abu Dhabi’s occupier market is expected to remain subdued with new take-up likely to continue being driven by public sector entities and smaller domestic businesses. The latter are looking to capitalise on the weaker conditions by consolidating operations, or upgrading offices, where possible, but average space requirements remain relatively small amongst this cost-conscious cohort, who will find Prime rents remaining firm.”