Aldar reports high office occupancy as demand for Abu Dhabi commercial space soars

Al Maryah Tower is expected to be operational in the first quarter of next year, developer says

During the first half of 2023, the office sector in Abu Dhabi enjoyed robust growth with Grade A rents returning to levels last reported in 2016, Aldar said. Photo: Aldar

Aldar Properties, Abu Dhabi’s biggest listed developer, said that the average occupancy rate for its prime Grade A commercial property in the capital reached a record 97 per cent, driven by higher demand in the emirate.

Occupancy rates at the towers located at the Abu Dhabi Global Market, the international financial centre on Al Maryah Island, rose to 99 per cent compared with 79 per cent when it was acquired by Aldar in 2022, the developer said in a statement on Monday.

Meanwhile, the occupancy rate in Aldar's other Grade A commercial properties in Abu Dhabi, HQ and International Tower, is at 95 per cent.

“With a favourable business environment, the city continues to be an attractive destination for leading global corporates to establish their regional presence, and we are seeing this result in strong demand for future developments,” Jassem Busaibe, chief executive at Aldar Investment, said.

The average lease term of the towers at ADGM spans four years and host companies such as PwC, Deloitte, Brevan Howard, Cleveland Clinic, Adnoc, G42 Asset Management and Abu Dhabi Commercial Bank, Aldar said.

The developer said that Al Maryah Tower, another prime commercial property in the capital, is expected to reach a pre-leasing occupancy rate of 50 per cent by the end of this year and will be operational in the first quarter of next year.

In December, Aldar Properties and Abu Dhabi's sovereign wealth fund Mubadala Investment Company partnered to acquire Al Maryah Tower in a deal valued at Dh450 million ($122.5 million).

“During the first half of 2023, the office sector in Abu Dhabi enjoyed robust growth with Grade A rents returning to levels last seen in 2016,” Aldar said.

“The current performance of the office market is supported by a positive economic landscape, as demand for high quality Grade A assets remains firm amid limited supply, resulting in rising occupancy rates across prime commercial properties.”

The property market in the UAE bounced back strongly from the pandemic-driven slowdown in 2021 and the trend has continued since then as its economy, the Arab world's second-largest, remains on a solid growth trajectory.

Demand for office space across Abu Dhabi remained “buoyant” throughout 2022, according to a March report by UK-based consultancy Savills.

There has been a significant surge in transactional activity in Abu Dhabi's office market during the first half of 2023, reflecting “the city's commitment to economic diversification and [this] serves as a powerful catalyst in boosting investor confidence”, Knight Frank said in a report in July.

Average rents within Abu Dhabi free zones, which now include Al Reem Island, have risen by 31 per cent over the past 12 months to rates of up to Dh1,600 a square metre.

The increase has been driven by a combination of greater demand from businesses expanding their operations and a limited supply of available commercial space, according to Knight Frank.

In the first six months of this year, commercial office sales transactions rose to Dh1.3 billion, representing a 220 per cent increase in sales transactions compared to the same period last year, Andrew Love, partner and head of ME capital markets at Knight Frank, said.

“Notably, almost 70 per cent of these transactions in 2023 took place on Al Reem Island and Al Maryah Island, amounting to a combined total of Dh919 million, driven by the availability of Grade A supply, which remains highly sought after but [in] very short supply across the city, and also by the recent announcement of ADGM's expansion.”

The ADGM said in May that it will expand tenfold with the addition of Al Reem Island, increasing the district's combined geographic area to about 1,438 hectares.

The move will make it one of the world’s largest international financial districts, the ADGM said at the time.

Abu Dhabi's office market is set for an estimated 109,500 square metres of additional office space within the next two years, spread across Al Raha Beach, the Abu Dhabi mainland, Al Reem Island and Khalifa City, Knight Frank said.