Weak demand continues in Dubai's office market
Dubai’s office market continues to face stagnant growth in 2017, according to a report by real estate consultancy Cluttons
Dubai’s office market continues to face stagnant growth in 2017, according to a report by real estate consultancy Cluttons.
The Cluttons bi-annual Dubai Office Market Bulletin for Summer 2017 notes “weaker-than-normal demand” in most areas across the city’s office market.
Lower limit rents in Deira have fallen by AED10 per square foot (psf), now standing at AED50 psf by the end of June, and positioning the area as the weakest performer during the second quarter as well as during the first six months of the year.
Faisal Durrani, Cluttons head of research, said: “Faltering global economic conditions are chipping away at demand, with some reports of deals falling through in recent months due to a more cautious approach being adopted by some multinational organisations.
“Much of the activity we have been involved with recently has involved a consolidation of operations, across a number of different sectors.”
The Dubai International Financial District (DIFC) remains the most expensive for office space in Dubai, with occupancy levels holding at near 100%.
The Business Bay area however has witnessed a rise in upper limit rents of AED20 psf, making it the strongest performer in Dubai’s Office market during the second quarter of 2017.
TECOM free zones remain primary targets for many of the city’s new market entrants and show high demand from the ever-expanding technology-media-telecoms (TMT) sector.
In Internet City, Media City and Dubai Knowledge Park area for instance, upper limit rents (including service charges) have increased by almost 5% to AED220 psf.
Paula Walshe, head of International Corporate Services at Cluttons, said: “As we previously reported, the depth of demand has resulted in the fast tracking of the 1 million sq ft Innovation Hub, which is reportedly ahead of schedule and due to be completed by late 2018, or early 2019.
“However much of it is likely to be pre-let, suggesting the upward pressure on rents here will persist.”
Walshe added that both Internet City or Media City remain among the most popular locations for new market entrants, especially those from Europe and the United States.