Abu Dhabi is running out of office space due to strong demand from hedge funds and other major businesses.

Occupancy rates in Al Maryah Island, home to the emirate’s international financial district, have so far reached nearly 100%, Bloomberg reported, quoting a representative for the Abu Dhabi Global Market (ADGM).

“With growing demand for companies to locate within ADGM, occupancy rates in Al Maryah Island have exceeded 95%,” the source said in an emailed statement.

Major hedge funds, as well as capital firms and crypto companies have set up in Abu Dhabi this year, with the emirate’s sovereign wealth funds attracting interest from fund managers, as well as its tax-free regime, according to the news agency.

Two of the biggest hedge funds in the UK – Marshall Wace and Capula Investment Management – are looking to expand operations in Abu Dhabi.

ADGM has granted licenses to several other companies this year, including those owned by Axa SA, Paxos Inc., Morgan Stanley and Barrenjoey Markets.

Occupancy rates

Occupancy levels in the UAE capital have outpaced those in other major destinations, including New York, London, San Francisco. It is also slightly higher than in Dubai, where occupancy rates averaged 91.3% in the first three months of the year.

In Manhattan, 16% of office space had no occupants as of April, a trend the city has not witnessed since the 1990s.

The high demand for office space in Abu Dhabi has driven up rental rates. During the first quarter of the year, average Prime, Grade A and Grade B rents rose by 6.6%, 3.4% and 9.7%, respectively, according to CBRE.

“Throughout the first quarter of the year, we have seen a marked demand from private businesses, where we saw a number of new and existing market players looking to expand their footprint within the capital, predominantly within off-shore locations,” the real estate consultancy said in a report.

Between January and March this year, Abu Dhabi’s office market logged 10,475 rental contracts, marking a year-on-year growth of 9.1%, CBRE said.

(Writing by Cleofe Maceda; editing by Seban Scaria) seban.scaria@lseg.com