As the practice of work from home carried on into another year, prime office rents in Dubai carried on to decrease in the Q1 of the year, touching to the lowest level reported since about 9 years ago, new numbers from Knight Frank reflected.
Average rents of prime offices over the emirate stood at just more than 200 dirhams (%54.45) per square foot, which is 4.3% lesser than a year before and the lowest since the Q3 of 2012. Citywide, average rates decreased by 7.7% year-on-year.
Millions of workers all over the world were sent home at the beginning of the COVID-19 outbreak the previous year and since then, many have not been back to their workplace.
According to Faisal Durrani, Knight Frank’s head of Middle East research, the office market is still feeling the impact of the coronavirus pandemic, although “there are pockets of activity emerging”, particularly in the technology-media-telecoms sector.
“The increased level of activity stems from rising nationwide business confidence, driven by the world-leading vaccine rollout programme that is allowing a semblance of normality to return,” said Durrani.
“Still, this doesn’t take away from the fact that the pandemic has fundamentally altered occupier mindsets, with occupational strategies still under review, with a view to factoring greater remote working going forward.”
This week, Dubai relieved some of its COVID-19 limitations, allowing social gatherings like weddings, concerts, and other events to continue with less stringent needs.
Abu Dhabi market
In Abu Dhabi, the office market is predicted to remain still.
Market-wide vacancy stood at 21.7% at the end of Q1, down slightly from 21.9% in the Q4 of 2020. The vacancy rate at prime offices also averaged 25.6%, lowered from about 29% in the Q1 of 2020.
“Activity in Abu Dhabi’s occupier market is expected to remain subdued with new take-up likely to continue being driven by public sector entities and smaller domestic businesses. The latter is looking to capitalize on the weaker conditions by consolidating operations, or upgrading offices, where possible, but average space requirements remain relatively small among this cost-conscious cohort,” said Durrani.
Limitations are relied upon to ease further as the UAE attempts to accelerate the economic recovery from the pandemic. Every day COVID-19 contamination rate in the UAE has quite recently begun to ease, averaging under 2,000 new cases since the start of the month.
Home to some 9.7 million residents, the UAE has so far recorded 547,000 cases since the pandemic started, with a loss of life of 1,633.