Dubai office market stabilises during Q3 2015
The upward creep in rates in some of old Dubai’s office submarkets is also reflective of the performance of the wider economy
Dubai's office market is showing signs of stabilising with average rents remaining virtually unchanged across all of the city's submarkets and free zones, according to Cluttons.
Cluttons Winter 2015/16 Dubai Commercial Market Outlook report reveals that overall prime, secondary and tertiary office rents have remained unchanged for the first three quarters.
Steven Morgan, CEO of Cluttons Middle East, said: “Occupier activity is down, however a positive sign remains in the diversity of the market, which is reflective of the overall economic activity. Banks, financial institutions, law firms, construction companies and technology-media-telecoms firms round off the list of the most active occupier groups, with the city’s free zones remaining the primary target.”
The upward creep in rates in some of old Dubai’s office submarkets is also reflective of the performance of the wider economy and dominated by domestic occupiers.
According to the report the city’s free zones still tend to be dominated by multinational organisations, with take up activity is intrinsically linked to business performance in their home markets.
Faisal Durrani, head of research at Cluttons, said: “Free zones across the city continue to review expansion plans in order to cater to the buoyant level of requirements, with schemes such as the Innovation Hub at Dubai Internet City expected to ease pressure on rents once completed in Q4 2017. New free zones are also seeing increased interest and activity, highlighting the important role free zones play.
Despite this, Cluttons does however remain cautious on the short term outlook for Dubai’s commercial market.
Durrani added: “With the outlook for global growth faltering, we expect occupier activity will continue to slow, with office space requirements shrinking during next 12 months. The ability of the market to absorb this new space is likely to dampen the speed at which the office market sees a resumption in rental value growth as there is a risk of supply inching ahead of demand, although a lot of this is likely to be in the Grade B category.”