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Earlier this month, rating agency S&P Global Ratings assigned Abu Dhabi a stable outlook maintaining that economic growth will steadily recover over the next two-years.
According to S&P: “The exceptional strength of the government’s net asset position provides a buffer to counteract the effect of oil price swings on economic growth, government revenues, the external account.”
The agency also forecasts a rise in GDP; the capital’s GDP growth will reach 1.5% in 2018, due to higher oil production in the second half of the year, to 2% in 2019. The agency predicts that GDP will gradually rise to 3% by 2021.
Looking at Abu Dhabi’s office market. Real estate consultancy Knight Frank reveals that following a strong start to the year, the office market witnessed some muted activity, but there was increased activity from certain sectors in the market.
According to Knight Frank, firms will hold off on executing many corporate decisions until there is a clearer understanding and implementation of 100% foreign ownership laws and the outcome of proposed mergers in the banking sector.
In Q3 2018, demand for office space was largely driven by requirements from the oil and gas and technology sectors. Oil and gas firms accounted for over 65% of enquiries and technology companies accounted for almost 21% of total demand according to Knight Frank data. The engineering and construction, financial and general trading sectors accounted for the next three largest pools of demand at 5.2%, 4.7% and 3.7% respectively,” revealed Knight Frank.
However, the real estate consultancy indicates that with improvements in Free Zone licensing and pro-active leasing, in areas such as the ADGM in 2018, there has been a significant increase in take up in these areas.
“In the short to medium term, we expect that market conditions in Abu Dhabi’s office sector will remain challenging with rental rates continuing to fall. However, we expect that the rate of decline is likely to start to moderate, particularly in the Prime and Grade A segments.
More so, a result of renewed activity in the oil sector and the expected benefits of the AED 50bn stimulus packages as well as the easing of regulation, we expect demand to tick up from early 2019,” notes the real estate consultancy.