Gov’t innovation drive spurs Dubai’s office sector
Dubai government’s innovation drive is spurring activity within the emirate’s office segment, according to real estate consultancy, Cluttons
Dubai government’s innovation drive is spurring activity within the emirate’s office segment, according to Cluttons.
The real estate consultancy stated that the technology-media-telecoms (TMT) sector is currently amongst the most active in Dubai, owing to government efforts to position the city as the Middle East’s leading technology hub.
Cluttons’ biannual Dubai Office Market Bulletin for spring 2017 confirmed that high levels of activity have been recorded.
Faisal Durrani, head of research at Cluttons, commented: “The rising star in the office occupier market is certainly the TMT sector, and Internet City and Media City remain the core focus of this rapidly expanding and ever-important [industry] for Dubai’s economy.
“The government’s recent Future-Accelerators Programme is paving the way for further strong expansion in this area over the short term. However, with a limited amount of space available in high-demand locations, interest is likely to rise in complementary free zones, such as Dubai Science Park.
“Samsung, for example, has recently trebled its floor space, while Amazon Web Services announced plans to establish a new Middle East office in the emirate as it works to grow its presence in the region,” Durrani added.
Even so, overall activity in Dubai’s office market remains muted, according to Cluttons. The consultancy noted that throughout the course of 2016, 10 of the 23 submarkets that it monitors registered decreases in upper-limit rental rates.
The markets of Garhoud, Al Barsha, and Deira were among the weakest performers, witnessing year-on-year falls of 18.2%, 10%, and 9.1%, respectively. Dubai International Financial Centre (DIFC) emerged as the city’s best performer in 2016, with upper-limit rents rising by 5.7% during the course of the year.
Murray Strang, head of Cluttons Dubai, said: “Looking ahead, The Avenue, DIFC’s retail parade, is expected to spur overall activity and take-up across the district. The avenue is expected to bring increased connectivity as DIFC matures into a more pedestrian-friendly environment. For now, core buildings command very low vacancy rates of sub-5%, and we expect this to persist.
“The shortage of space in this part of DIFC is hampering activity,” he continued. “No supply relief is expected until early 2019, when the $1bn ICD Brookfield Place is expected to complete. The development will provide 900,000 sqft of grade-A space. Nearby, One Central may offer further significant grade-A space when a further two buildings in Phase 2 complete later this year.”
Durrani concluded: “While 2016 was broadly punctuated by high levels of consolidation activity – notably from the oil and gas sector, but also existing occupiers looking at efficiencies through single-hub operations – a lot of that activity has all but subsided.”