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Nick Maclean

Dubai tops Mideast office space market

DUBAI, July 17, 2016

Dubai, UAE leads the office space market in the Middle East and is ranked 23rd globally according to the  Global Prime Office Occupancy Costs survey conducted by CBRE Global Research and Consulting.

The Dubai office occupancy ranking has dropped by four when compared to last year, translating to more affordable office rental space. Dubai’s current prime office occupancy costs in Q1 is Dh280 ($76.2) per sq ft per annum.

The study found that Abu Dhabi was ranked as one of the most expensive markets globally in Q3 2015 and has now dropped by 4 ranks according to the global report. Abu Dhabi’s current prime office occupancy costs in Q1, 2016 is Dh1,800 per sq m per annum.

Nick Maclean, managing director, CBRE Middle East, said: “We continue to see strong demand from international companies primarily seeking to improve the quality of accommodation and/or its efficiency.  The latter point is particularly important for organisations whose staff are spread across several buildings.”

“Dubai’s position as first choice for regional new entrants is very important.  In addition to direct real estate considerations, the relative depth of the labour pool and the quality of the aviation transport sector are cited as important in corporate decision making.

“Overall the market fundamentals in the commercial sector remain positive particularly for well-located buildings of good quality.  Poorly located offices with indifferent facilities, particularly those which are badly managed, will struggle against more competitive new stock,” he added.

According to the CBRE research, Hong Kong (Central) scored the world’s highest-priced office market and Asia continued to dominate the world’s most expensive office locations. Shanghai (Pudong), China in 10th place and New York moved up to 9th place as the most expensive office market in the Americas, with a prime office occupancy cost of $136.7 per sq ft.

Hong Kong’s (Central) overall occupancy costs of $290.21 per sq ft. per year topped the “most expensive” list. London-Central (West End), United Kingdom followed with total occupancy costs of $262.29 per sq. ft. Beijing (Finance Street) ($188.07 per sq ft.), Beijing (Central Business District (CBD)) ($181.60per sq. ft.) and Hong Kong (West Kowloon) ($179.49 per sq ft.) rounded out the top five.

Global prime office occupancy costs increased 2.4 per cent in the year ending Q1 2016 reflecting the same rate of growth stated in the previous survey. At the beginning of the year, the global stock markets were unstable, however the service sector was not adversely impacted. The study implies that the economic growth is expected to pick up in the coming quarters which will then translate into further occupancy cost increases.

Twenty-two markets have moved more than three ranks upwards and EMEA markets account for 36 per cent. CBRE tracks occupancy costs for prime office space in 126 markets around the globe.

Europe Middle East & Africa (EMEA)

The study also found that occupancy costs in EMEA increased 2.1 per cent year-over-year on an annual basis, on par with the 2.2 per cent gain seen in Q3 2015. Dublin, Stockholm and Barcelona were the fastest- growing markets in the region. Most Central and Eastern European markets were down year-over-year, including Moscow, which is still in the midst of a recession. Costs accelerated quickly in South Africa, with Johannesburg, Cape Town and Durban all seeing increases of at least 6.9 per cent from year-ago levels.

Office occupancy costs rose 2.7 per cent year-over-year, up from 1.9 per cent in Q3 2015. EMEA’s 2.1 per cent year-over-year growth rate in Q1 2016 was about the same as the 2.2 per cent pace seen in Q3 2015.

These rates of occupancy cost growth may seem low compared to the higher pace of growth in some of the individual markets where demand for space is very high. However, it is important to keep in mind that inflation
is low, so 2.4 per cent represents real growth in office occupancy costs, and is significant for both office users and investors. – TradeArabia News Service




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