Rents for the best office buildings in Abu Dhabi fell for the sixth straight quarter as new developments increased the amount of available space, CB Richard Ellis Group Inc. said.
The average rent for prime properties fell 12 percent to 2,300 dirhams ($626) a square meter in the first quarter from the previous three months, the Los Angeles-based real-estate broker said in a report published today. The vacancy rate increased by about 2 percent, versus an average of less than 1 percent in recent years.
“Landlords are becoming more and more anxious to fill their developments and to avoid long void periods,” Matthew Green and Arlene Jimenea wrote in the report. “The shift in market dynamics is now resulting in increased tenant incentives, and more generous leasing terms for occupiers.”
New office projects on Al Sowwah and Al Reem islands will add to the amount of office space in Abu Dhabi, the United Arab Emirates’ capital. A rent cap of 5 percent introduced by the government in the first quarter also benefited tenants, CB Richard Ellis said.
Abu Dhabi home prices have dropped by an average of 40 percent from their peak in the third quarter of 2008, Jimenea said in response to e-mailed questions. Some homebuyers have struggled to obtain mortgages from banks that are reluctant to lend.
“The sales market remains muted as financing and other credit facility remain tight,” Jimenea said.