Five out of 27 locations in Dubai have seen office rents return to pre-pandemic rates, while Knight Frank states that in Abu Dhabi the city’s office sector continues to demonstrate resilience.
“Despite the quieter end to 2021, early data from Q1 suggests a rebound in demand in Dubai, led by technology businesses that are expanding their footprints, albeit many are start-ups,” Faisal Durrani, Partner – Head of Middle East Research, Knight Frank.
“To an extent, the expansion by this group of occupiers is being eroded by a number of businesses that are still reassessing their occupational strategies, many of whom are shrinking their office footprints as a result of the rise in hybrid working models, which appear to be gaining a sense of permanency, particularly amongst international blue chip and professional services businesses, as well as a handful of international banks.”
LIMITED SUPPLY PIPELINE IN THE DUBAI OFFICE MARKET
According to Knight Frank’s Andrew Love, Head of Middle East Capital Markets and Occupier Services & Commercial Agency there is a very limited supply pipeline of high-quality office stock in Dubai, which is where the attention of businesses remains centred.
“The resultant impact of this market dichotomy is upward pressure on rents, or at worst, stability in lease rates for the city’s best buildings, while some of the older, more secondary stock is starting to experience a migration of businesses to better quality buildings.
“What this means is that some sought after submarkets with high concentrations of prime office buildings, are unable to satisfy demand,” says Love.
Business Bay leads in the recovery of office rents, where rents have increased from AED 76 psf in Q1 2020 to AED 101 psf at present.
REMOTE WORKING AND THE SERVICED OFFICE SECTOR IN THE UAE
Knight Frank reveals that the shift in working culture has also given rise to the serviced office sector.
Away from the consolidation activity, serviced office providers are increasingly active in the market, offering enterprise solutions to businesses that are looking for greater lease flexibility and plug n’ play space, which is growing in popularity, as it has done in major global gateway cities, says Knight Frank.
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