RIYADH: Hedge funds flocking to Abu Dhabi have pushed office occupancy rates over 95 percent, prompting a call for an increase in business-centric real estate.
Up from 91.3 percent in the first quarter, tenancy levels at the four towers in Abu Dhabi Global Market, situated on Al-Maryah Island, are now nearly full, according to Bloomberg.
The government plans to expand the free zone’s jurisdiction to neighboring Al-Reem Island in a move that will give it 10 times as much space and make it one of the largest financial districts on a global level, stretching 14.4 million sq. m.
This move aligns well with the fact that Abu Dhabi’s sovereign wealth funds pose a big draw for hedge fund managers, along with the emirate’s tax-free income and the weather.
The time zone also allows workers to trade across Asian, European, and US hours, helping the city attract firms from London, Hong Kong, and Singapore.
It also fits with ADGM’s aim of attracting diverse businesses, including financial institutions, asset management, and fintech, as well as corporations and professional services firms.
Furthermore, it sets Abu Dhabi apart from other prominent global cities such as New York, London, and San Francisco, where high office vacancy rates persist due to a significant shift toward remote work following the pandemic.
“With growing demand for companies to locate within ADGM, occupancy rates in Al-Maryah Island have exceeded 95 percent,” a representative for ADGM said in an emailed statement.
“Consequently, expansion is the next natural and necessary step to better accommodate the increasing demand of companies seeking to establish a presence in the financial hub of Abu Dhabi,” the representative added.
Moreover, as part of this expansion, officials are ordering existing tenants of Al-Reem Island to obtain an ADGM license or vacate their offices by the end of the year.
The office space shortage creates bottlenecks for large multinational companies’ real estate managers. Executives have months to assess long-term leases, but some companies have had to make such decisions within a week in Abu Dhabi.
Due to the limited availability of office spaces for lease, some companies are considering developing their own towers across the emirate.
“To find space at the moment is very challenging,” said David Short, an associate director at Cushman & Wakefield Core.
“When companies identify the space they like, they often have to move fast or risk losing it,” Short explained.
Additionally, the boost in demand has lifted average rents across prime, Grade A, and Grade B spaces, which saw rents climb 6.6 percent, 3.4 percent, and 9.7 percent, respectively, in the first quarter.
Established in 2015, ADGM provides a comprehensive suite of business solutions, encompassing different legal structures and company registration and incorporation, as well as regulatory guidance and oversight, dispute resolution, and access to a vibrant community of like-minded professionals.
Source: Arab News
