Abu Dhabi and Dubai no longer feature among the world's 10 most expensive office markets, according to a Knight Frank report.
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Abu Dhabi has moved from sixth to 13th on the property company's list of the most expensive markets last year, while Dubai now occupies 12th place after ranking seventh in 2009. Lagos, Nigeria and Geneva are among the markets above the UAE cities.
London has replaced Tokyo as the most expensive office market in the world. The two markets switched spots at the top of the list from 2009, with London offices now averaging €1,067.9 (Dh5,830) per square metre, compared with €1,051 per sq metre for an office in the Japanese capital. In contrast, Dubai rents are now €550.8 per sq metre, while Abu Dhabi's are €513.1.
The decline will not come as a surprise to anyone following the local property sector. There has been a surge of new towers entering both cities' markets in the past year, driving down prices.
In Dubai, 44 per cent of office space is vacant and the empty space is expected to increase to more than 50 per cent in the next year, according to Jones Lang LaSalle, the property consultancy.
In the fourth quarter of last year Dubai office rates declined by 30 per cent from the previous quarter, it reported. The situation in Abu Dhabi is not as extreme as Dubai, but it is catching up. After years with businesses competing for space in too few buildings, the capital is undergoing a transformation. "The past 12 months have seen office lease rates plunge as new supply has been completed and while the economic environment has worked against commercial property," the industry adviser CB Richard Ellis (CBRE) reported at the end of last year.
Abu Dhabi office rental rates have fallen more than 60 per cent since 2008, according to CBRE data.
