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The UAE’s commercial property market is set to outpace even Hong Kong, one of the world’s leading property markets. According to Bloomberg Intelligence ‘s survey of over 600 business owners, 43% in the UAE plan to expand their office space. Meanwhile, in Hong Kong, landlords are expected to struggle to fill vacant spaces in 2H on the back of reduced commercial tenant demand.
The breakdown: In Abu Dhabi, 39% of employees reported that their employees have increased or plan to increase their working space. This figure sits even higher in neighboring Dubai, rising to 44%, with heightened demand in both emirates driven by a limited supply of high-quality, sustainable office spaces and attractive yields of 6% in Abu Dhabi and 5% in Dubai.
Demand for co-working spaces across the country also rose 14% y-o-y in 4Q 2024, compared to a 10% decline in demand in Hong Kong.
Dubai leads the way in demand and office stock: Dubai is surpassing Abu Dhabi in both demand and supply of modern office spaces, boasting 7.9 mn sqm of high-quality office stock compared to Abu Dhabi’s 3 mn sqm. Vacancy rates in the emirate dropped to 8% in 4Q 2024, down from 10% in 4Q 2023.
Abu Dhabi saw its vacancy rate decline at a sharper pace: Abu Dhabi’s office vacancy rates dropped by 10 percentage points y-o-y to 15% in 4Q 2024, down from 25% last year. This trend is supported by a higher proportion of office-based work in Abu Dhabi (27%) compared to Dubai (22%).
More (luxury) office spaces on the horizon? Both emirates plan to introduce new luxury buildings to address the ageing office stock. The Dubai International Financial Center is set to add three office towers, with plans to unveil more expansion plans by late 2025. Meanwhile, Abu Dhabi will increase the capacity of its financial free zone tenfold through its extension to Reem Island.
What are the risks? Bloomberg Intelligence identifies high interest rates and global economic uncertainties as potentially affecting strong office space demand, alongside an increase in remote work trends.
