The top-end of Dubai’s office property market is starting to stabilise further with supply levels more or less running in sync with demand.
Dubai - The top-end of Dubai’s office property market is starting to stabilise further with supply levels more or less running in sync with demand. For the majority of office tenants, there haven’t been any sudden rental shocks, as rates have been flat for the better part of 22 months.
This holds true for both prime and secondary office locations, with upscale properties quoting Dh200 a square foot on average, while those down the value chain are getting about Dh100 on average, according to the latest update from CBRE.
“The ongoing permanence of rents underlines the relative scarcity of good quality office accommodation in key areas, although future pipeline levels are now starting to rise again after a flurry of major new launches,” said Mat Green, Head of Research & Consulting UAE, CBRE M.E.
A combined 85,000 square metres of new office accommodation was completed during the third quarter, including the handover of the National Bank of Abu Dhabi headquarters in Al Jadaf and Building C3 at Dubai Trade Centre District.
And then there was the launch of “District 2020”, a mixed-use scheme adjoining JLT and which will provide high grade office space in the lead-up to Expo 2020. A key phase of the project — which comes from DMCC is expected to be handed over in Q4-21 following the Expo.
Meanwhile, in Dubai’s retail space, size and scale are turning decisive in how much mall operators can charge. “Trading conditions for smaller community and regional centres and non-mall formats have become more testing,” the report states. “Retailers are increasingly looking for flexibility from landlords to help soften the impact of changes in sales volumes.”
They will need as much help from mall owners as they can get. Down the line, there will be the further pressure imposed by around 1 million square of gross leasable area (GLA) to be handed over between 2017-19.
In residential sales, the market continues to keep the numbers up, and especially from a year-on-year perspective. Data from Dubai Land Department shows total value of residential transactions up by about 11 per cent in H1-17, driven by growth in overall transaction numbers, which rose close to 29 per cent. But average sales price “experienced a minor dip, falling by around 1 per cent”.
In residential leasing, average rentals dipped 1.5 per cent from the second quarter, but with notable variations in performances at a sub-market level.
“The disparity between rising deal volumes and the performance of the leasing sector demonstrates how investors appear to be taking a longer-term view on the residential market, looking beyond softening rentals,” said Green.
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