UAE Real Estate Market Adjusted to The “New Normal” in 2017


UAE office market summary

Dubai office market summary


Total office supply in Dubai reached 8.86 million sq m of GLA as of Q4 2017. The Trade Centre saw the completion of 70,638 sq m of GLA during the year, with the handover of One Central (69,087 sq m) and Duja Tower (1,551 sq m).

Consolidations are continuing across various sectors of the market, with tenants trying to reduce rental costs, therefore looking for more affordable buildings but still focused on good locations. Given the latter, the majority of upcoming offices are concentrated in established commercial areas such as Tecom, the DIFC, and Business Bay.

Future office supply in Dubai is expected reach 9.13 million sq m and 9.28 million sq m at the end of 2018 and 2019 respectively. Likely notable completions in 2018 include The Opus in Business Bay (5,200 sq m), Du Biotech Headquarters (34,500 sq m) and the first phase of Motorsport Business Park (6,000 sq m).


Despite the generally challenging year, some buildings recorded positive leasing results in 2017. One example is Central Park Towers in DIFC, which due to attractive rental terms announced two major key tenants. Marriott International are relocating their regional office for the Middle East and Africa into the building and are taking up approximately 7,900 sq m of GLA, (the first major company with a dual license), operating both an on-shore and off-shore license in the DIFC. The second tenant is expected to occupy approximately 5,800 sq m of GLA.

Dubai Internet and Media City have among the highest occupancy levels in the city, an average of 95% across all buildings, illustrating the lack of speculative development and Tecom’s success at retaining its tenants.

Abu Dhabi office summary:


There were no completions in the office sector over Q4, with office supply in Abu Dhabi remaining at around 3.5 million sq m of GLA as of Q4 2017.

Future completions in Abu Dhabi are expected to deliver around 211,000 sq m and 57,000 sq m of GLA in 2018 and 2019 respectively. Notable completions in 2018 are likely to include the ADIB headquarters, Leaf Tower on Reem Island and Omega Tower on Reem Island.


Vacancies in the office sector in Abu Dhabi reached 22% in Q4 2017, remaining stable over the quarter. Office rents remained largely stable over the year for both Grade A and B buildings. However, as new supply enters the market, we are likely to see rents decline as competition increases which will prompt tenants to negotiate better rents and additional benefits to their tenancy terms such as longer grace periods, additional parking spaces and better service provision, as landlords incentivise to attract tenants.

Sharjah office market summary

Demand for office space in Sharjah is limited due to a combination of factors including inadequate parking and traffic congestion in established areas, Sharjah’s undeveloped public transport system, the absence of a clear business district and strong competition from Dubai. The main constraint remains the lower proportion of office employment within Sharjah’s economic base (which is more industrial in nature than other Emirates), something that is not going to change significantly in the short term.


There is an estimated total of around 1,110,000 sq m of existing office space in Sharjah (as at Q3 2017), with the majority of this in onshore locations. While an average of 2,500 new companies have been registered in the two free zones in Sharjah (Sharjah Airport Free zone and Al Hamriyah port free zone), most of these companies are small employers that do not require significant amounts of office space.

Most of the quality office towers are located in the Al Majaz area, which can be regarded as the Central Business District of the Emirate. A significant proportion of the total office space in Sharjah is of secondary quality and located in mixed-use buildings, where the majority of space is occupied as residential premises.

There are relatively few new office buildings currently under construction in Sharjah (with less than 150,000 sq m in active projects scheduled to complete in 2018 / 2019 and some of these projects being developed for government related agencies. While there are plans for a significant number of additional projects, many of these announced projects are unlikely to proceed in the absence of demand. Those that do proceed are likely to be on a build to suit basis for specific occupiers.


Office rents have declined across Sharjah in 2017 in the face of slower economic growth and limited demand. Rents in the basket of Grade A & B buildings monitored by JLL declined by 17% over the year to Q3 2017 to average AED 564 sq m per annum. with further declines predicted for 2018 as companies continue to cut costs.

As with all markets, rents for the prime office space (those in Al Majaz with sufficient onsite parking and water views) are higher than the market average. The asking rents in these buildings can range up to AED 750 sq m per annum but deals are certainly being done at below these levels.


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