Saturday 17 August 2019

Businesses taking advantage of lower rents in Dubai, says expert

DUBAI, May 11, 2019

Businesses are benefitting from Dubai’s lower rental costs and generous location incentives, according to leading real estate provider Savills. 
The current market dynamics are favouring occupiers and that landlords are offering a range of benefits to entice organisations and entrepreneurs, stated Savills in its latest The Dubai Office Market research.
The Savills study indicates new providers entering the serviced office sector, with improved legislation allowing these providers to operate in the region more freely. 
There is also an increasing trend towards co-working spaces catered towards start-ups and tech entrepreneurship, where open desk spaces offer more cost-effective solutions for fledgling companies, it stated.
"Dubai is already an attractive hub for global corporations and while office market activity has softened in the first quarter, the city offers an increasingly beneficial operating environment for businesses," remarked Paula Walshe, the director for International Corporate Services for Savills.
"With lower rents, a range of quality developments available and landlords taking a more flexible approach to leasing, both domestic and international organisations are well-placed to take advantage of Dubai’s business-friendly rental environment," she added.
According to Walshe, there is a culture for entrepreneurship in the UAE, as the economy diversifies away from oil-based industries and moves towards technology and knowledge-based start-ups as set out in the UAE Vision 2021. 
"It is clear that such trends are affecting the Dubai office market and that landlords must keep pace with the changing business demands in order to stay profitable and ensure continued occupancy of their office spaces," she noted.
Savills pointed out that demand for small and medium sized offices has outstripped that of larger office spaces, as businesses choose to streamline their operations. 
To incentivise occupiers, landlords have become more flexible, with approaches such as rent-free periods, offering extended car parking facilities, shorter lease terms and even upgrading shell and core spaces to Category A fit-outs (CAT A) to secure agreements, stated the expert. 
Savills predicts that supply will continue to outpace demand through 2019, meaning developers and landlords will continue to offer such benefits to tenants. The most stable sub-sector is good quality prime buildings, with demand remaining more consistent and therefore holding more stable rental values, it added.
According to Savills, average rents in DIFC remained the highest at approximately Dh200/sq  ft/annum, with Dafza and Downtown Dubai at Dh135 to Dh170 ($37 to $46) per sq ft every year, Media City and Internet City at Dh160/sq ft/annum and Sheikh Zayed Road averages at Dh140/sq ft/annum.
Savills is a global real estate services provider listed on the London Stock Exchange. It operates from over 600 owned and associate offices, employing more than 35,000 people in over 60 countries throughout the Americas, the UK, Europe, Asia Pacific, Africa and the Middle East.-TradeArabia News Service


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