The launch of VAT in the UAE has had little effect on the commercial occupier market in Abu Dhabi, according to a new report.
Knight Frank's Q1 2018 Abu Dhabi Commercial Market Review said that this is also likely to be the case going forward in the UAE capital's office market.
The report said that although more than 195,000 square metres of stock is pencilled in to be delivered in Abu Dhabi, in reality around 70,000 sq m is likely to be brought to market with the remainder being delayed to 2019.
Taimur Khan, senior analyst, said: “The vast majority of this new supply is not considered to be prime therefore its impact on the prime market is likely to be limited.”
The report said prime office rents in Q1 registered at AED1,800 per sq m per annum on average, down 1.6 percent compared to the year-earlier period.
Citywide office space witnessed steeper declines in rents of up to 12.9 percent, the report added.
Knight Frank said Abu Dhabi’s GDP decreased by 2.7 percent in the year to Q3 2017. Despite the weaker performance in the oil sector, the non-oil sector has remained resilient.
It added that the short to medium term outlook for Abu Dhabi’s office market remains negative with further falls in rental rates expected over the coming year.