Dubai office demand ‘will restart stalled projects’
Dubai, April 10, 2013
Increased consumer confidence and demand for office space in the first three months of the year will encourage previously stalled developments to restart in Dubai, a report said.
Despite predictions of price rises, Dubai’s office market is very fragmented, with several submarkets struggling to attract tenants, added the market report for Dubai’s office and retail property sectors released by Cluttons, a real estate specialist.
However, some locations have seen a rise in rents over the past six months, the report noted.
According to Cluttons, this has been apparent particularly in areas that suffered most from the property collapse of 2008, including new business districts such as Jumeirah Lakes Towers (JLT), Tecom C, Al Barsha and Business Bay, where commercial rents had previously fallen by as much as 50 per cent.
JLT and Business Bay, in particular, have seen a significant improvement in both inquiry levels, take-up of space and rising rental levels. In these locations, Cluttons has seen rents increase by 10 – 15 per cent in better quality and completed projects. Prime space in buildings, such as Almas Tower in JLT, have recently achieved rental levels of Dh150 ($40.8) per sq ft per annum.
Across the prime Grade A markets, Cluttons continues to note competitive pricing of office space with landlords analysing the demands of tenants more closely.
Landlords are splitting units into smaller floorplates and fitting out space in an attempt to attract potential tenants. Rents in newer buildings on the Sheikh Zayed Road, towards the Trade Centre, are now around Dh100 – 140 per sq ft per annum; with Downtown and Emaar Square still attracting some of the highest rental levels of between Dh140 and 180 per sq ft per annum.
Dubai Mall - global retail destination
The retail sector continues to show considerable activity across most locations, including both community retailing and malls. Cluttons attributes this to high wealth levels and consumer confidence, the report said.
In February, Emaar Properties confirmed that visitor numbers had risen 20 per cent in 2012, with boosted retail sales of 24 per cent year-on-year. Planned expansion of Fashion Avenue in the Dubai Mall is still on schedule to complete in 2013.
Elsewhere, annual footfall remains strong in malls such as Mall of the Emirates, Mirdif Mall and Deira City Centre, that target the mid to high level income residents and tourists. These shopping complexes have continued to perform well and their successes are demonstrated by their very low to zero vacancy rates.
Mall rents that are within Grade A developments also remain strong at around Dh350 to 500 per sq ft per annum.
Finally, Cluttons has observed strong interest in community retail units, established within high-density residential districts such as the Marina, JLT and Al Barsha. Rents for these units vary between Dh140 to 300 per sq ft per annum. – TradeArabia News Service