Dubai office market forecasts by Cluttons
Real estate consultancy firm Clutttons has released the Dubai Commercial Outlook report.According to the Cluttons, Dubai’s office market is showing signs of cooling, following a strong growth period, with average rents remaining unchanged during the first three quarters of 2015 across all the city’s major submarkets and free zones.
Overall, average prime,secondary and tertiary office rents have remained unchanged for the first three quarters, standing at AED 250 psf, AED 130 psf and AED 70 psf, respectively.The city’s office markets remains fragmented, with micro markets, which are often as small as specific buildings, continuing to buck wider market rates, such as Emirates Tower (AED 310 psf) or The gate District (AED 225 psf).
Banks, financial institutions, law firms, construction companies and technology-media-telecoms (TMT) firms are the most active occupiers, with the city’s free zones remaining the primary target.
Steve Morgan, Cluttons Middle East CEO, commented, “Space requirements from these segments are undoubtedly lower than this time last year, however, the limited amount of new stock deliveries in these areas, coupled with a steady rate of requirements, is putting upward pressure on rents in key locations and buildings.
“We are seeing some migration to submarkets such as Business Bay where average rents range from AED 70 psf to AED 120 psf and are perceived to offer better value for money compared to Deira or Bur Dubai. Business Bay is also more centrally located, as the city’s centre of gravity continues to drift further south.” ha edded.
Faisal Durrani, Cluttons Head of Research, said “With the global growth outlook faltering we expect occupier activity to slow and office requirements to shrink during next 12 months. This comes at a time when land values in submarkets such as Business Bay are cooling and, therefore, improving the financial viability of previously stalled projects that are now resuming construction. There is a risk of supply inching ahead of demand, although a lot of this is likely to be in the Grade B category.”
Nurullah Kırmacı/ [email protected]