Abu Dhabi’s Office and Industrial Sectors generate Solid Growth in Early 2024
Abu Dhabi’s office and industrial sectors demonstrated impressive growth, driven by strategic investments and a robust non-oil economy.
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The first quarter of 2024 has seen robust growth in Abu Dhabi’s office and industrial sectors, fueled by sustained economic expansion and targeted investments, according to recent reports by the leading real estate expert Savills on the capital’s office and industrial sectors.
The influx of investors and international professionals has led to heightened demand for commercial office spaces, underscored by a notable 9.1% growth in the non-oil sector and a 3.1% increase in the real GDP in 2023 compared to 2022.
“Abu Dhabi aims to bolster its non-oil economy and establish itself as a significant player in global manufacturing. Government programs like the industrial sector strategy and the ‘Make it in Emirates’ initiative have facilitated business expansion by providing financing, incentives, and support,” Stephen Forbes, the Savills head of Abu Dhabi.
Significant growth was observed in Abu Dhabi’s office market in the first quarter, driven by an increase in non-oil economic activities, which comprised 52.8% of the total economy in 2023.
The non-oil GDP experienced a 7.7% surge in the third quarter of 2023, primarily caused by the manufacturing and construction sectors, which contributed over 17% and 16.3% respectively.
The demand for high-grade commercial office space remains strong, with prime properties like the Abu Dhabi Global Market (ADGM) and International Tower reaching approximately 95% occupancy rates.
ADGM alone reported a 32% increase in operational firms and a 22% rise in workforce numbers in 2023, mirroring the escalating demand for office spaces.
Key areas such as Maryah Island, Capital Centre, Masdar City, and Al Raha are continuously drawing interest due to their exceptional connectivity, infrastructure, and construction quality.
Savills noted a shortage in Grade A office assets in the market, with high occupancy levels driving up rental rates. However, projections show that over 90,000 sqm of new office space will be available by 2026, with significant developments like The Link Masdar City and HB Office Tower underway.
Furthermore, ADGM’s expansion to Al Reem Island and new developments on Saadiyat Island are anticipated to satisfy the increasing demand for premium office spaces by 2027.
Overall, rental rates across various micro-markets saw a 1% quarter-on-quarter growth, with some prime locations experiencing a 7% annual increase.
In the industrial rental sector, Abu Dhabi continues to show strong performance, supported by governmental strategic initiatives like the Industrial Sector Strategy and the ‘Make it in Emirates’ initiative.
The non-oil sector’s robust 9.1% growth significantly contributed to a 3.1% rise in the real GDP in 2023.
Small and Medium-sized Enterprises (SMEs) play a crucial role in this growth, accounting for approximately 98% of businesses and contributing over 42.8% to the non-oil GDP.
The Abu Dhabi Department of Economic Development (ADDED) observed a 51.5% increase in industrial licenses issued in 2023, with the total capital of new companies surpassing AED 210.7 billion ($57.3 billion).
Key sectors including finance, insurance, construction, and transportation have notably expanded their contributions to the non-oil GDP.
Michael Fenton, Director of Industrial & Logistics at Savills Middle East, said: “Abu Dhabi is positioned as a global manufacturing hub, and the robust growth in the non-oil economy and the increasing demand for top-tier industrial and logistics facilities underscore the emirate’s commitment to fostering a business-friendly environment.”
Industrial space rental rates in Abu Dhabi increased by 2% quarter-on-quarter, with high-specification locations in ICAD 1 and Kezad witnessing a significant 14% year-on-year rise.
Facilities featuring advanced amenities like temperature control continue to garner premium rents, Fenton noted.
He also highlighted the consistent strong demand for industrial and logistics spaces in areas such as ICAD, Mussafah, and Kezad.
Kezad, strategically located between Abu Dhabi and Dubai and near Khalifa Port, continues to attract significant occupier interest. The sector is expected to grow further with ongoing construction projects adding nearly a million sqft of space in Mussafah, ICAD, and Al Markaz.
“Kezad Group is investing AED621 million in developing 250,000 sqm of warehousing capacity by the end of 2025,” noted Fenton.
“Aldar is also expanding its logistics asset, ADBH, by 33,000 sqm, with full occupancy expected by major firms such as Etihad and Mubadala,” he added.
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This collaboration will extend into the fourth phase of Azizi’s Riviera project in MBR City, with Cummins supplying top-tier power generators.
2 min
Azizi Developments, a prominent private developer in the UAE, and Cummins Inc., a global leader in power solutions design, manufacturing, distribution, and supply, are extending their partnership into the fourth phase of the large-scale Riviera project. Cummins, known for its diverse range of products including diesel, natural gas, electric, and hybrid powertrains, as well as powertrain-related components, like filtration, after-treatment, turbochargers, fuel systems, control systems, air handling systems, automated transmissions, electric power generation systems, batteries, hydrogen generation, and fuel cell products. The manufacturer is globally renowned for its excellence in both innovation and sustainability.
Mr. Farhad Azizi, CEO of Azizi Developments, said: “As we continue our collaboration with Cummins Inc. for the fourth phase of our flagship project, Riviera, we reaffirm our commitment to procuring and utilizing only the highest quality materials. This partnership highlights our dedication to providing exceptional lifestyles for our investors and end-users through the careful selection of premium components. We are confident that our now-broadened alliance with Cummins Inc. will help in maintaining the high standards established for Riviera and further elevate the benchmarks of quality and excellence.”
Riviera is part of Azizi Developments’ award-winning portfolio. It is a stylish waterfront lifestyle destination that comprises 75 mid- and high-rise buildings with approximately 16,000 residences.
Designed to introduce the French-Mediterranean lifestyle to Dubai, which is not merely about architectural art, but also about a certain ‘joie de vivre’ — a celebration of life, an exultation of spirit, Riviera represents a new landmark destination that is both residential and commercial, with an abundance of retail space. Riviera features three districts: an extensive retail boulevard, a lagoon walk on the shores of its 2.7 km-long swimmable crystal lagoon with artisan eateries and boutiques, and Les Jardins — a vast, lush-green social space.
With its strategic location near the upcoming Meydan One Mall and the Meydan Racecourse — home of the Dubai World Cup — as well as Dubai’s most noteworthy points of interest, Riviera represents one of Azizi Developments’ most coveted projects.
Azizi Developments’ Sales Gallery can be visited on the 13th floor of the Conrad Hotel on Sheikh Zayed Road.
Chris Dixon, a partner who led the charge, says he has a ‘very long-term horizon’
Americans now think they need at least $1.25 million for retirement, a 20% increase from a year ago, according to a survey by Northwestern Mutual
