Abu Dhabi Office Rents Fall 27%, May Drop More as Supply Increases by Half

Abu Dhabi office rents fell 27 percent in the second quarter from a year earlier and will drop further as supply increases by more than half through 2012, Jones Lang LaSalle Inc. said.

Vacancy rates reached 8 percent in the quarter and will also probably increase over the coming years, the property broker said in a research report published today. An abundance of supply in neighboring Dubai will help push down rents, Jones Lang said.

Office rents in Dubai dropped as much as 17 percent in the second quarter as new space outstripped demand, CB Richard Ellis Group Inc. said in a separate report today.

In Abu Dhabi, a shortage of Grade A office space is likely to widen the gap between rents for the best buildings and lower- rated properties, Jones Lang said. A significant share of the offices under construction the United Arab Emirates capital won’t meet international Grade A standards, it said.

Abu Dhabi has about 2 million square meters (21.5 million square feet) of total office stock, and an additional 1.2 million square meters will come on the market by the end of 2012, Jones Lang said.

To contact the reporter on this story: Ross Larsen in London on Rlarsen2@bloomberg.net

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