Office rents in Etihad Towers increased 18 per cent in the final three months of last year as demand for Abu Dhabi’s small stock of super prime headquarters space intensified despite the oil price slump.
The landmark cluster of five glass and steel towers on the Abu Dhabi Corniche, which combines homes, shops, offices and a hotel, witnessed the fastest growing office rents last year, according to property broker Cluttons.
With annual rents of Dh 2,250 per square metre, the mixed-use tower complex, developed by Sheikh Suroor Projects Department, was the second most expensive office location in Abu Dhabi.
The building is home to businesses including Samsung Engineering, General Dynamics, EADS, Gensler, Korea Exchange Bank, CCC, National Ambulance Company, as well as the France and Fijian embassies.
Etihad Towers lags Mubadala’s Abu Dhabi Global Market Square office complex which, after a year where leasing activity was frozen while new free zone rules were drawn up, is currently marketing office space at Dh3,700 per square metre.
Other super prime office buildings reporting steep rent rises of between 8 per cent and 13 per cent during the final quarter of 2014 included World Trade Centre Abu Dhabi at the Central Market site and Nation Towers on the Corniche where rents reached Dh2,000 per square metre and International Tower near Adnec where rents stand at Dh2,050 per square metre, Cluttons said. In total Cluttons identified just nine super prime office buildings in the city which were available for rent.
However, although office rents for these few buildings rose steeply in the final quarter of 2014, no increase was recorded in any grade A development during the first quarter of this year as slumping oil prices subdued the local economy – about half of which is dependent on the hydrocarbon sector.
“With oil prices fluctuating around the US$50 per barrel mark, we are likely to see this start to impact the rate of job creation in the oil and gas sector as the year progresses and hydrocarbon linked firms begin reassessing their growth plans,” said Steve Morgan, chief executive of Cluttons Middle East.
“For now it is our view that with the limited amount of grade A space available and in the pipeline, and with demand likely to persist, according to our central scenario, office rents are likely to hold steady, with almost no movement expected this year at the top end of the market.”
But the same could not be said for Abu Dhabi’s plentiful stock of secondary and tertiary buildings, the estate agent added.
“We expect rents in these categories to edge downwards, widening the gap between the city’s distinctive, two tiered market,” Mr Morgan added.
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