Abu Dhabi commercial real estate demonstrates steady growth

Rising demand, new regulatory flexibilities, and increased development activity across the emirate of Abu Dhabi has resulted in continued growth in both the office and industrial real estate sectors during 2024, a report showed.

According to the Abu Dhabi Commercial Property Market Report by Savills Middle East, the number of economic licences issued on the mainland rose by 16 per cent in 2024, while active licences in non-financial free zones grew by 22 per cent.

These increases coincide with regulatory changes introduced by the Abu Dhabi Department of Economic Development (ADDED), which now allows companies registered in other emirates and free zones to open branches in Abu Dhabi without the need for a physical presence in the first year.

The report notes sustained demand for Grade A office space, leading to high occupancy levels across several developments. International Tower, Daman House, and Baniyas Tower are operating at full occupancy, while occupancy within ADGM has reached 97 per cent. The number of operational entities within ADGM rose to 2,088, including 231 financial services firms, a 31 per cent increase compared to H1 2023.

In terms of rental performance, Grade A office buildings in the central business district (CBD) and outer CBD submarkets recorded an average year-on-year increase of eight per cent in Q4 2024. Notable individual buildings saw higher growth: Capital Gate Tower (14 per cent), Addax Tower (13 per cent), and ADGM (12 per cent). ADGM office rental rates range between Dh2,600 and Dh2,900 per sq m per annum.

Stephen Forbes, Head of Abu Dhabi, Savills Middle East, said: “Occupier demand in Abu Dhabi remains strong, especially within key sectors such as financial services, consulting and technology. As a result, we continue to see high occupancy rates in well-located, Grade A buildings. The introduction of regulatory changes and infrastructure expansion is contributing to sustained interest in the emirate. In parallel, the industrial sector has also seen impressive growth, with average rental rates rising 25 per cent year-on-year, driven by strong demand from third-party logistics, e-commerce, and retail occupiers.”

Looking ahead, more than 100,000 sq m of new office supply is expected to be delivered in 2025, including developments such as Masdar City Square and Yas Place, which have already recorded healthy pre-commitment levels.

The industrial and logistics sector also recorded notable activity. According to the report, average market rents rose by 25 per cent year-on-year in 2024, with submarkets such as Kezad experiencing rental increases of 38 per cent. Mussafah, ICAD and Kezad all reached or exceeded Dh500 per sq m per annum. Key demand drivers include third-party logistics (3PL), e-commerce, and retail operators.

Major announcements in H2 2024 include a Dh5 billion industrial and logistics park by Mubadala and Aldar, and a Dh320 million warehouse facility by ADAFZ and Radius, delivering over 90,000 sq m of space by Q4 2026. Kezad has also commenced development of 250,000 sq m, scheduled for completion in Q4 2025.

“While upcoming supply may ease some pressure, demand for specialised and high-quality facilities is expected to remain firm across both the office and industrial segments,” Savills Middle East noted.