UAE: Business Bay office occupancy lowest in Dubai
Office occupancy rates in Business Bay dropped to 60% in Q2 2016 – the lowest level of all Dubai sub-markets – according to Core, UAE associate of Savills
Office occupancy rates in Dubai’s Business Bay area continued to witness a marginal softening in rentals during Q2 2016, according to research from Core, UAE associate of Savills.
Office occupancy rates in Business Bay witnessed a 3% decline during the quarter, with occupancy levels at just 60% - the lowest among all of Dubai’s office sub-markets.
Core UAE’s Q2 2016 Dubai Office Report also found that the emirate’s prime central office locations, Sheikh Zayed Road and Downtown, witnessed a 6% drop in the months April through June.
Commenting on the findings, David Godchaux, chief executive officer of Core UAE, said: “This is because the area is relatively new and is yet to be fully developed.
“We see buildings located in the interior of Business Bay facing decreased space take-up compared to the buildings near Sheikh Zayed Road, as a gap in infrastructure and access is yet to be resolved.
“However, we expect absorption levels to moderately go up as the development nears completion, along with assistance from the burgeoning demand from start-ups,” he added.
Overall, during what Core UAE referred to as “the busiest Ramadan in recent years”, moderate upward pressure was exerted on the Dubai International Financial Centre (DIFC) office market.
High occupancies; sustained demand from banking, financial services, and insurance (BFSI) and ancillary sectors; robust regulations; and largely single-owned grade-A stock helped to drive a 6% increase in rents during Q3, according to the real estate specialist.
At present, Dubai has approximately 8.36 million m2 of office stock, 30% of which qualifies as prime, according to the Core UAE report.
Around 680,000m2 of additional supply is expected to come online in Dubai by 2018, with Business Bay accounting for 30% of this stock.