The slowing of the world economy has left some large commercial real estate markets like Dubai facing decreased occupancy levels, but a new report from Cluttons shows renewed interest in the United Arab Emirates. Businesses are taking a second look at the Dubai market because of competitive rents that are the result of oversupply and the expectation of even more available office space in 2012. Vacancy has been measured at 50% now and market observers believe there will be 12 million square feet added to the supply of office stock by year’s end. For more on this continue reading the following article from Property Wire.
The commercial property market in Dubai is seeing an increase in tenant activity across the whole sector, according to the latest report from property surveyors and consultants Cluttons.
Occupier activity is improving across Dubai as companies take advantage of lower rents and new office opportunities with some 12 million square foot of new office space expected to have been delivered onto the market by the end of 2011.
Overall vacancy levels in the commercial sector will edge closer to 50% as new office stock is brought to the market and new supply in the DIFC is pulling businesses located in the surrounding area back into the freezone.
Claim up to $26,000 per W2 Employee
- Billions of dollars in funding available
- Funds are available to U.S. Businesses NOW
- This is not a loan. These tax credits do not need to be repaid
The report also shows that lease terms are becoming more flexible across the board, as Dubai’s market shows signs of maturity.
High levels of supply in new commercial areas is providing smaller businesses with a large amount of choice and competitive rents, however there still remains a limited choice of Grade A single ownership buildings suitable for regional and international headquarters, it also shows.
As more office buildings are completed, with an additional 12 million square feet expected on the market by year end, vacancy rates continue to rise, forcing downward pressure on rents in certain areas of the city. Tenant demand is generally being driven by the increased affordability of rents, and the opportunity to move into new offices from older buildings, it also points out.
Vacancy rates have risen in the DIFC over the past quarter, traditionally a highly sought after area, as a number of commercial buildings in freezone area have been brought to the market.
Cluttons is noticing increased activity as a number of larger businesses located on the periphery re-locate their satellite offices back into the core DIFC. Cluttons is also noticing a trend for occupiers to relocate to modern offices in the Central Business District from older districts such as Deira and Bur Dubai continues.
Lease terms offered by landlords are generally becoming more flexible and attractive to tenants. The number of landlords willing to pay agency fees is also increasing as the liability can no longer be place upon the tenant; a practice that is common place in foreign markets.
Cluttons predicts that this movement will help drive Dubai’s property market to a higher level of maturity.
This article was republished with permission from Property Wire.