The occupier market in Abu Dhabi saw the leasing activity remain solid in the third quarter, as the total number of rental registrations climbed to 8,814, which was a year-on-year increase of 9.8%.
There was a 25.2% increase in rental registrations during this period, while a 9.9% drop was recorded in renewed registrations.
Government related entities are generating the majority of the occupational activity seen in Abu Dhabi in both on-shore and off-shore locations.
With that said, the private sector occupiers have contributed to high demand in the past quarter across a number of businesses.
The occupier activity in the financial services and legal entities have recorded major growth. CBRE also tracked institutional-grade buildings and their market-wide occupancy rate had climbed to 90.8%.
In the same quarter last year, it had stood at 87.1%. There has also been an improvement in rental performance due to the rising demand.
In the last 12 months, there was an increase in average Prime, Grade A and Grade B rents by 7.0%, 8.6% and 13.0%, respectively.
The occupier market in Dubai also continued to see robust demand in the third quarter of 2023. Dubai Land Department published data, which showed that the total number of rental contracts recorded stood at 35,822.
This marked an increase of 40.7% from a year ago. The total number of new rental registrations in this quarter reached 26,568, which is 50.1% higher than a year ago.
During this period, the total number of contracts that were renewed reached 9,254 and this marked a year-on-year increase of 19.2%.
One of the major concerns is the imbalance between the demand and supply and this results in a market that favors the landlords.
Businesses are also under greater pressure because of the current market backdrop. The decision-making processes of global corporates tend to be lengthier.
Therefore, they are unable to meet the tight deadlines of making decisions where landlords are concerned, who are now following a first-come and first-served basis.
Instead, most occupiers are opting to renew their leases and agree to longer-lease terms because it provides them certainty.
But, this will have an impact on the growth plans of their businesses in the medium to long-term. In addition, this trend is expected to last because the new developments are very limited.
This quarter has also seen another prominent trend, which is a significant increase in demand for serviced and fitted spaces because cost-effective solutions are provided.
This market segment saw the average occupancy rate rise 92.4% in the third quarter this year, which is an increase from a year earlier when it was 86.9%.
Rental growth continues because of the high levels of demand and the lack of availability of quality stock.
As the new stock is expected to remain limited over the upcoming period, this segment is expected to experience solid performance.