UAE’s Office Market Steady Recovery in Q4 2021
The last quarter of 2021 saw UAE’s office market segment show steady signs of recovery, according to real estate and investment management firm JLL’s UAE 2021 Year in Review report. The report indicated that Dubai’s Central Business District showed rising demand for good quality office stock combined with relatively limited supply in this segment, resulting in Grade A rents increasing by 2 per cent year-on-year to an average of Dhs1,712 per square metre per annum. Grade A rents in Abu Dhabi also rose by 5 per cent to an average of Dhs1,650 per square metre. Towards the end of 2021, UAE saw the introduction of reforms such as a change to the work week from Monday to Friday, aligning with global markets, and new labour laws and visa options. The report highlights that over the medium to long-term, such initiatives will help boost the UAE’s competitiveness by attracting and retaining a skilled workforce and making it a more appealing location to live and work. Khawar Khan, head of research for the Middle East, Africa and Turkey region at JLL, said: “The pandemic-induced uncertainty about future business conditions and changes in employee preferences have underpinned a surge in enquiries for flexible space options such as serviced business centers. Khan added that: “Occupiers have also expressed interest in good quality fitted office space in an effort to minimise capital expenditure due to constrained budgets”. In the residential market, a ‘race for space” and the relative affordability of villas and townhouses during the depths of the pandemic helped stimulate the strong recovery in sales prices – a trend which extended into 2021’s final quarter. This was seen in both Dubai and Abu Dhabi. Waterfront developments in Dubai, as well as villa projects in Abu Dhabi – particularly on Saadiyat Island and Yas Island – experienced demand from investors and end-users alike. The retail market registered a pick-up in footfall and turnover in the last quarter. This has been attributed to various factors, including the success of the UAE’s vaccination programme which has led to easing restrictions, a resumption of global travel, as well as the start of the Expo 2020 event in October last year. Due to the uncertain economic climate, retail occupiers continue to push for incentives such as rent-free periods, contribution towards capital expenditure on fit-outs and revenue-share options. “Forecasts show that, in the UAE, the recovery in tourism and rising employment will support healthy consumer spending growth over 2022-23. This in turn should help provide a boost to retail sales – which are anticipated to broadly return to pre-pandemic levels by the end of next year,” said Khan. On the back of the Expo event and strong leisure demand, Dubai’s occupancy rate reached 63 per cent in the YT November 2021 – up significantly from 40 per cent in the corresponding period last year. Over the same period, the city’s average daily rate (ADR) rose by 25 per cent year-on-year to $150. Abu Dhabi’s occupancy rate rose to 66 per cent in the year to November 2021, when compared with 60 per cent a year earlier. Meanwhile, the capital’s ADR increased by 4 per cent year-on-year to $92 in the year to November 2021. “The emergence of the new Omicron Covid-19 variant has prompted a wave of travel restrictions in the MENA region and other parts of the world. As a result, travellers and hoteliers will likely face an extended period of uncertainty. Still, our expectation is that the UAE’s hospitality market will continue its gradual recovery in 2022 as both business and leisure travel see further improvement as key source markets continue to relax travel restrictions,” concluded Khan.
Tags : INTERNATIONAL JLL UAE Abu Dhabi Dubai flexible space office market Labour Laws Waterfront Developments