Dubai and Abu Dhabi Suffering Severe Office Shortages
- January 13, 2023
- Posted by: axiom_admin
Rent Rates to Go Up
Corporate Confidence in the Two Commercial Centers
There is a shortage of office spaces in Dubai and Abu Dhabi because of the rising corporate confidence in the UAE. And with the broad return of employees to their workplaces, the problem is significantly highlighted. Consequently, the occupancy levels in the two biggest commercial centers in the UAE keep skyrocketing considerably. It is estimated that Dubai alone needs an additional 265,000 square feet of office space.
Rent Prices to Rise Steeply
The rents in the two emirates will undoubtedly continue rising because of the demand and supply gap. Even the number of people wishing to lease space in the costlier Grade A segment is increasing. Generally, occupancy levels are currently between 90% and 95%.
Office Shortages in Dubai
Besides the above-mentioned needed additional 265,000 square feet of office space in Dubai, with the yearly need at 739,000 square feet, the market is on target to outdo the 1.1 million square feet of requirements recorded in 2021.
One of the most significant obstacles in the market is the lack of quality Grade A space, while occupants are moving into more contemporary spaces that are well-managed and maintained.
As a result, office lease rates for the upper echelon buildings will keep increasing. As a result, the gap between rental performance in the two-tiered office market is anticipated to expand, and Grade B will likely continue to suffer.
Office Shortages in Abu Dhabi
Abu Dhabi is suffering a shortage of Grade A office space, with tenancy rates at 95% in prime buildings. The average office rent in the emirate has increased by 4.9% in the past year.
However, the demand for office space is increasing everywhere. Nonetheless, like Dubai, Abu Dhabi’s office sector needs more high-grade space in professionally managed buildings.
Office Shortages The middle east
Because of the booming regional economy, many large, multinational companies flock to the two emirates and the Middle East as a whole. The said clustering of these conglomerates in the region pushes the real estate sector to try to catch up to the constant increase in demand. However, the supply shortage benefits the real estate sector as the rent prices never cease to surge.