Oil slowdown hits Abu Dhabi H2 2015 office market
The UAE's capital city reportedly suffered a slowdown in office investor interest on the back of regional unrest and declining crude values
Abu Dhabi's real estate market has registered a dip in investor interest following regional unrest and global economic shifts.
The Emirate's recently-released real estate law, however, is expected to build a strong foundation to allow long-term investment in its occupational market.
Yet, as oil prices declined in the second half of 2015, Abu Dhabi's office segment reported a slowdown in the number of investor enquiries.
Knight Frank's Abu Dhabi Office Report for H2 2015 found grade A and prime supply remain "subdued", with completion targets of developments under construction being delayed.
Prime office rents amounted to $517.27 (AED1,900) per sqm, while rental values for Grade A Shell and core steadied at $354 (AED1,300) per sqm.
The consultancy expects buildings which do not meet occupier requirements in terms of specifications, parking, access, and egress, will continue to face a poor market response.
Construction and engineering, however, were most enquired about during H2 2015, indicating optimism for the large volume of infrastructure projects planned and under construction in the Emirate.
Remarking on these developments, Matthew Dadd, partner at Knight Frank, said: "With economic growth expected to slow and UAE inflation expected to fall in 2016 from 4.0% (f) in 2015 to 3.5% (f) in 2016, the outlook for the UAE still remains positive.
"Demand from occupiers is expected to remain low with take up for smaller requirements.
"There is however, limited supply entering the market, which will mean landlords will not witness a jump in availability across the market," Dadd added.