Abu Dhabi office rents continue fall, but outlook may be better next year

Knight Frank particularly noted the increasing appeal of the Abu Dhabi Global Market area, above, to possible corporate tenants. (Courtesy Abu Dhabi Global Market)
Updated 19 October 2017
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Abu Dhabi office rents continue fall, but outlook may be better next year

DUBAI: Average office rents in Abu Dhabi continue to fall but recent macroeconomic data could translate into a more optimistic outlook for the sector next year, property consultancy Frank Knight said.
In the year to third quarter, average grade A rents across the city have fallen by 11.5 percent, Frank Knight said. Prime market rents on average stood at Dh1,774 per square meter annually, grade A at Dh1,150 per square meter and citywide rents at Dh1,167 per square meter.
“On the back of continued sluggish economic performance, Abu Dhabi’s occupier rental rates continued to trend down across all segments of the market. With weaker demand from the public sector and oil sector firms being the most significant factor underpinning the trend,” Knight Frank said in its report.
“Activity in the market continues regardless of these major cutbacks, however the vast majority of space requirements are in the 100 sqm to 500 sqm range with general trading and professional trading firms making up the majority of demand.”
Abu Dhabi’s non-oil sector was forecast to register higher growth rates, which can compensate for the current weakness in the hydrocarbon sector, while OPEC’s oil rebalancing was underpinning crude prices and may eventually support a possible reversal of job cutbacks in the government and oil industries. The two scenarios could work out well for the office rental market in Abu Dhabi, Knight Frank indicated.
Knight Frank also said vacancy remained stable as of the third quarter at 23 percent, and with supply forecast to go up by another 80,000 square meters next year, the overall vacancy rate was expected to increase slightly.
“The short to medium term outlook for Abu Dhabi’s office market remains negative, however we expect that not all of the forecast supply will come to fruition,” the property consultant said.
“The slowdown in new supply could provide a floor to rental values across
the capital in the long run. This is particularly the case in the Prime and Grade A segment, where supply is already somewhat limited,” it added.
Knight Frank particularly noted the increasing appeal of the Abu Dhabi Global Market area to possible corporate tenants after the emirate’s financial free zone approved the use of private Real Estate Investment Trusts (REITs) as Qualified Investment Funds.
“Given the recent increase in appetite in the region for REIT exposure, this may foster an increase in demand for office space within the ADGM,” it said.


OPEC will balance oil markets, but spare capacity limited — Nigerian official

Updated 26 September 2018
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OPEC will balance oil markets, but spare capacity limited — Nigerian official

  • ‘OPEC will do everything to stabilize, to balance the market’
  • Nigeria’s current crude oil production is about 1.7 million bpd

SINGAPORE: The Organization of the Petroleum Exporting Countries (OPEC) will act to balance the market after oil prices hit their highest in four years, but its options may be limited by available spare capacity, a Nigerian oil industry official said on Wednesday.
“It’s obvious that if you have high prices it’ll affect demand, so you have to do some market balance,” Malam Mele Kyari, head of crude oil marketing at Nigeria’s state oil firm NNPC and also the country’s OPEC representative, said.
“OPEC will do everything to stabilize, to balance the market but I’m sure you’re also aware that there’s a limit to what they can do. You must have the spare capacity,” Kyari said.
Oil prices surged this week on uncertainty over the global supply outlook following US sanctions on Iran’s oil exports and also as Saudi Arabia and Russia ruled out any immediate boost to output.
Kyari said Nigeria planned to increase its crude oil, condensate output by 100,000 barrels per day by the end of the year, up from about 2 million bpd currently.
The country’s current crude oil production is about 1.7 million bpd, he said.
In 2019, the African producer is aiming for an average output of 2.3 million bpd by boosting output from existing fields as well as starting new production from an ultra-deepwater field, Kyari said.
Located some 130 kilometers off Nigeria’s coast at water depths of more than 1,500 meters, the Egina oilfield is expected to start production in December and its output could peak at 200,000 bpd.
Kyari was in Singapore to launch the new Egina crude grade with field operator French oil major Total at APPEC.
The crude has an API gravity of 27.3 degrees and has a sulfur content of 0.165 percent, a provisional crude assay from Total showed.
The grade has a higher yield of gasoil and vacuum distillates compared with other products, according to the assay.