UNDERSUPPLY IS EXPECTED TO UNDERPIN MARKET FUNDAMENTALS
Abu Dhabi's office market remains structurally undersupplied, with no new office completions recorded in Q2 2026. A further 40,000 sqm is expected to be delivered by year-end, primarily across multiple buildings in Masdar City, where strong pre-leasing activity reflects continued occupier demand. This follows several years of limited completions, during which demand has consistently outpaced supply, sustaining exceptionally tight market conditions across prime office locations. While the future development pipeline is substantial, the majority of new stock is not expected to be delivered until after 2029, supporting continued market resilience over the near to medium term.
OFFICE RENTS REMAINS RESILIENT UNDERPINNED BY HIGH OCCUPANCY LEVELS
Despite heightened regional uncertainty and a moderation in leasing activity, Abu Dhabi's office market remained resilient in Q2 2026, supported by constrained supply and record occupancy levels. As a result, city-wide office rents continued their upward trajectory, increasing 15% QoQ and 33% YoY to an average of AED 2,182 per sqm per annum. Prime rents in ADGM now exceed AED 6,000 per sqm, prompting some occupiers to explore more cost-effective alternatives on Al Reem Island. Unlike the wider Abu Dhabi market, ADGM and Al Reem Island are exempt from the recently announced rental freeze, enabling rents to respond to strong market fundamentals. Robust demand from global funds, asset managers, financial institutions and the wider BFSI sector, combined with an acute shortage of available office space, drove prime office rents up to these record levels in Q2 2026. Looking ahead, market fundamentals are expected to remain supportive. While occupier demand may soften modestly if economic uncertainty persists, the limited development pipeline over the remainder of 2026 and 2027 is expected to keep market conditions in landlords' favour. With no meaningful additions anticipated until the next phase of ADGM and Al Reem Island developments from 2029 onwards, occupiers are likely to continue competing for a limited pool of quality office space.
