Latest news with #officeproperty
Khaleej Times
2 days ago
- Business
- Khaleej Times
Abu Dhabi's office market stays vibrant on record rent, demand surge
Marked by record-high rental rates and soaring demand for Grade A space, Abu Dhabi's office property sector is witnessing a powerful surge in growth. According to the Q2 2025 Market in Minutes report by global real estate advisor Savills, the emirate's continued economic diversification, robust business sentiment, and limited supply have combined to create a highly competitive leasing environment, particularly within premium commercial zones. The Central Business District (CBD) recorded an exceptional 42 per cent year-on-year increase in rental rates in the second quarter, driven by rising demand and near full occupancy in flagship buildings. Outer CBD areas also saw strong growth, with rents increasing by 18 per cent during the same period. Notable commercial towers such as City Gate Tower and Abu Dhabi Global Market (ADGM) experienced annual rental hikes of 43 per cent and 30 per cent respectively, underscoring the appetite for top-tier commercial spaces. Within ADGM, where the financial free zone has solidified its reputation as a magnet for global firms, rents now range between Dh2,800 and Dh3,500 per square metre annually. Leasing momentum was further buoyed by ADGM's jurisdictional expansion into Al Reem Island in Q1 2025, which added nearly 500,000 square metres of commercial space. As a result, the number of licensed firms operating within ADGM surged 43 per cent year-on-year to reach 2,781 by the end of Q1, while the financial services sector alone grew by 26 per cent. This boom in occupancy and business activity has also translated into a workforce expansion on Al Maryah Island, where the number of employees has exceeded 29,000 — up 17 per cent from the previous year. Stephen Forbes, head of Abu Dhabi at Savills Middle East, attributed the market's strength to the emirate's rising appeal as a global commercial destination. 'Abu Dhabi continues to attract a diverse mix of regional and international occupiers, and the recent expansion of ADGM into Al Reem Island has only amplified that appeal. As more global firms establish a presence in the capital, we're seeing a clear shift toward larger, high-quality spaces,' he said. In the first half of 2025, the primary drivers of leasing activity were firms in banking, financial services, insurance (BFSI), consulting, technology, and hedge funds. There has been an increasing number of requirements for large office units ranging between 10,000 and 20,000 square feet, reflecting the city's growing role as a regional headquarters for global enterprises. Despite the strong demand, new office supply remains relatively constrained. Only about 100,000 square metres of commercial space is expected to be delivered in 2025, with new inventory primarily coming from projects such as Masdar City Square and Yas Place. However, these projects are already witnessing high levels of pre-leasing, indicating the strength of underlying demand. Another 100,000 square metres of space is projected to come online by 2027 from developments like One Maryah Place and Saadiyat Business Park. Savills anticipates that the sustained mismatch between demand and supply will continue to put upward pressure on prime office rents throughout the rest of the year. The advisory also noted that Abu Dhabi's position as a stable and transparent market with strong regulatory frameworks has been instrumental in attracting global investors and occupiers. This sentiment is echoed in the findings of dubizzle's H1 2025 Abu Dhabi Property Sales Market report, which identifies the emirate as one of the region's most attractive real estate investment destinations. Accelerating transaction values across affordable, mid-tier, and luxury residential segments have been driven by a combination of rising prices, investor appetite, and growing confidence in Abu Dhabi's long-term urban vision. The launch of digital property platforms like Madhmoun, aimed at improving transparency and ease of transaction, as well as landmark developments such as the upcoming Disneyland on Yas Island, have added to the city's investment appeal. These efforts are further supported by large-scale infrastructure projects that enhance connectivity and accessibility, positioning Abu Dhabi as a competitive alternative to more saturated regional markets. Overall, the strength of Abu Dhabi's office sector reflects broader macroeconomic trends. The emirate's non-oil economy grew by 6.1 per cent year-on-year in the first quarter of 2025, now contributing over 56 per cent to total GDP. This transformation, part of Abu Dhabi's Vision 2030 strategy to diversify away from hydrocarbons, is translating into sustained investor confidence and a vibrant, forward-looking commercial landscape. Property market analysts predict that with limited new supply, high pre-leasing activity, and a steady influx of international firms, Abu Dhabi's office market is poised for continued growth.
News.com.au
22-07-2025
- Business
- News.com.au
The Big Picture: With workers trickling back to the office, should investors follow?
Sydney office valuations have held up 'remarkably well', while Melbourne is lagging but recovering In 'Brizvegas', analysts expect a supply squeeze in the lead-up to the Olympics The RBA is almost certain to cut rates next month, thus supporting valuations Dubbed as one of the world's most hated asset classes during and after the pandemic, office property is emerging from its funk amid improving valuations and expectations of an acute supply deficit in Sydney and Brisbane post 2026. At the same time, astute buyers can acquire desirable properties on valuations they could only have dreamed about five years ago. Market strategist Jason Coggins* says there's little significant premium-grade new supply in the Sydney market, while the supply squeeze is likely to be even more evident in Brisbane in the lead-up to the Olympics. Will office follow retail? Coggins reckons the office sector is going through the same phase as retail assets five years ago, when mall owners sold on 'aggressively' high capitalisation (cap) rates that did not reflect replacement costs. Cap rates are the net operating rents derived from a property, as a percentage of the price paid for the asset. The higher the cap rate, the lower the price. 'The country is not built a major mall in more than 20 years and the population has gone from 20 to 28 million,' Coggins says. 'You will see that in some degree in office.' Macquarie Equities points to a gradual office recovery in the June quarter, with positive net absorption across all major cities. Net absorption means more space was taken up than vacated. Sydney performed most strongly during the quarter, but Melbourne improved the most over the last 12 months. 'We continue to advocate for a rotation into office based upon an anticipated gradual recovery in income fundamentals and stocks trading at deep discounts to book value,' the firm says. Sydney holds up 'remarkably well' Sydney has maintained its status as the most robust and liquid office market, especially in the CBD premium sub sector. For the record, that's the area within Circular Quay, Martin Place and George and Macquarie Streets. Coggins says transaction activity is increasing amid ongoing interest from Japanese, South Korean and Singaporean institutions. 'Sydney space trades at a premium because it's a highly deep and liquid market,' Coggins says. 'It's hard to get a good cheap deal.' He says when the Sydney Metro rail project started a decade ago, dozens of B grade buildings were razed. In the meantime, global companies demand A-grade space for their HQs and this space continues to trade on low cap rates. Coggins says A grade tenants are moving from locations such as North Sydney and Macquarie Park, into the CBD. Tenants are likely to crave premium space, with little visibility on new CBD projects beyond existing builds such as 55 Pitt Street and Charter Hall's Chifley stage two south tower. Two other key projects – 33 Alfred St and 121 Castlereagh St – have completed. … while Melbourne lags Down south, Melbourne's recovery still lags by about 12 months, with stubbornly high – but improving – vacancies. Agent Cushman & Wakefield says net effective premium rents rose 5.1% in the June quarter, but incentives (discounts and rent-free periods) remain at high levels. Coggins says the Melbourne downturn is skewed to out-of-favour 'campus style' developments in the Docklands precinct. Campus style doesn't refer to student digs, but low-rise buildings for a single corporate tenant and large amount of open space. Examples include Medibank headquarters and the National Australia Bank's Docklands office. Coggins says high incentives are a lagging indicator rather than a sign of things to come. … and 'Brizvegas' is set to boom again Cushman & Wakefield reports steady demand for Brisbane CBD office space in the June quarter, building on a strong December 2024 half. Once again, tenants favour premium and A-grade sectors, although net absorption moderated to -12,646 square metres. 'With several pre-committed supply additions due later in 2025, tenant movement is expected to lift in , particularly among larger occupiers seeking upgraded space,' the firm says. 'Overall, demand remains evident for high-quality and well-located assets in Brisbane's office market." This is "supported by rising effective rents and tightening vacancies". Buyers can still snare good deals, especially relative to the Sydney market. In a bellwether transaction, Sentinel Property Group acquired Green Square South in Fortitude Valley, for $132 million. The vendor was South Korea's Teachers Pension Fund. Tenanted by the Brisbane City Council – but only until 2027 – the property sold on a stratospheric 14% yield. 'Buyers in Brisbane get good prices because it is harder to sell assets and that extends to B-grade buildings, which are really hard to sell,' Coggins says. But as the Olympics loom, Coggins expects Brisbane to experience acute shortages of both office and retail property. The REIT way to invest Most retail investors access commercial property is by way of listed real estate investment trusts (REITs). These ranging in size from the $70 billion Goodman Group (ASX:GMG) (global industrial assets) to niche plays in convenience, rural assets, childcare and self-storage. The REITs most heavily exposed to office sector are Dexus (ASX:DXS), Mirvac (ASX:MGR), GPT Group (ASX:GPT) and the pure play Centuria Office REIT (ASX:COF). While valuations have improved, broker Morgans says office REITs trade at an average 24% to the value of their net tangible assts. Centuria Office trades at a 34% discount and the shares have lost 40% of their value since the pandemic's early days. Grounds for optimism The Reserve Bank of Australia held rates steady last month. But last week's surprisingly high unemployment number points to a cut at next month's meet. 'The forward yield curve has another two to three rate cuts prices in over six to 12 months and this will feed directly into valuations,' Coggins says. 'It also means the debt attached to these assets becomes cheaper and also supports valuations.' Property is also a bond 'proxy', in that investors will compare rental income yields with those from risk-free government bonds. Thus, lower bond yields make property look more attractive – and the reverse applies. The office story has a way to play out. ' While the office sector has seen improving fundamentals in recent months, high incentives and capital expenditure remain a headwind to net cashflow generation,' Citi says. 'We remain cautious on the subsector relative to retail, industrial, self-storage, residential and data centres.' Building optimism Coggins adds that as with Adelaide, Brisbane has higher occupancies because workers are less likely to work remotely. In Sydney and Melbourne, the CBD workforce is skewed to professions more likely work independently and remotely. 'Having said that, they tend to be prominent firms who want to showcase themselves in a premium location.' The working-from-home impact aside, Coggins notes that Australia is one of the urbanised countries in the world. 'People still need office space,' he says. 'In a world of geopolitical tension, investors typically view Australia as a safe haven.' *Jason Coggins holds multiple high-level advisory roles at leading fund managers, advice firms and family offices.
South China Morning Post
16-05-2025
- Business
- South China Morning Post
Earthquake jitters sway Thailand's office market, send tenants scrambling for low-rises
The earthquake that shook Myanmar and Thailand in March has weighed on office property demand in Bangkok, with some tenants now favouring low rises or low floors in skyscrapers, according to CBRE. Advertisement Some companies also delayed relocations to ensure the structural soundness of new offices, the property consultancy said in a report on Wednesday. The Thai capital was shaken by the 7.7 magnitude earthquake , which was centred in to neighbouring Myanmar close to the city of Mandalay, on March 28. A building under construction in Bangkok's Chatuchak district collapsed , with 89 confirmed fatalities and 72 people still missing as of May 15. The concerns over building safety are adding further pressure to an office property market that was already grappling with slowing demand. In the first three months of the year, the office vacancy rate rose to 28.1 per cent from 27.8 per cent in the last quarter of 2024, according to Cushman & Wakefield. In the same period, average prime office gross rents fell about 1.2 per cent to 939 baht (US$28.14) per square metre per month. 'Since the earthquake, some companies seeking new office premises have shifted their preference to low-rise buildings or lower floors in high-rise buildings,' said Maneerat Vichitrattana, senior director of office services at CBRE Thailand.
