Dubai office rents to stay stable: Knight Frank
Dubai, October 24, 2013
Demand for prime office space is increasing in Dubai, primarily driven by corporates and new start-ups. But with availability also on the rise, rents will remain stable over the next year, said a new Knight Frank report.
With economic prospects improving, occupiers are increasingly looking to capitalise through
expansion. That in turn has helped to boost demand for office space, albeit this, for the time being at
least, is limited to prime stock, said the report.
Landlords are achieving quoting rents on Prime/Grade A office buildings from smaller occupiers but are continuing to offer incentives to larger occupiers in order to secure a reliable income stream. Over the next year, we anticipate that occupier demand will continue to rise, however, the rise in development activity, and thus new supply, should keep Dubai office rents fairly stable, it said.
Developers who have persisted and delivered high-end projects in established business districts are now looking to capitalise on current and future occupier demand. Recent completions along Sheikh Zayed Road and Downtown have increased the levels of supply in those areas, adding a healthy amount of competition to existing onshore developments, it said.
"While corporate occupiers continue to consider strata title buildings, the associated complexities mean that they prefer those that are solely owned. Smaller, start-up occupiers, however, see strata accommodation as a viable and cost effective option. This is particularly notable in Business Bay and Jumeirah Lake Towers, where rental values have risen since the beginning of 2013," the report said.
Khawar Khan, research manager, Knight Frank Dubai, said: “With Dubai’s economic fundamentals strengthening, it’s not surprising that corporates and new start-ups are expanding. That in turn has helped to drive office occupier demand, as witnessed in Business Bay and Jumeirah Lake Towers, for example. However, with new supply entering the market, the expectation is that office rents
will be static this year.” - TradeArabia News Service