Middle East offices become more affordable but Dubai is still the most expensive location for office space in the Middle East; says DTZ research report

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Dubai witnessed the largest decline in 2009 with costs falling by 34%. Nevertheless, it still remains the most expensive location in the Middle East & Africa for office space with occupancy costs at           USD 14,520 per workstation[1], placing it eleventh in the global rankings. In twelfth place, Abu Dhabi's occupancy costs were USD 14,300 per workstation, followed by Doha in seventeenth place with costs of USD 12,520 per workstation in 2009. The least expensive location in the Middle East in 2009 was Al Khobar in Saudi Arabia where annual occupancy costs equated to USD 3,930 per workstation.

Nick Witty, DTZ's COO for the Middle East said:

"Occupiers throughout the region are taking advantage of the current market to demand increased leasing incentives from landlords. These include more flexible lease terms, extended rent-free periods and that office space should be fully or partially fitted out."

Paris is no longer among the top five most expensive office locations in the world, as London's West End entered 2010 as the world's most expensive city to occupy office space in. Ranked fifth in last year's survey, London's West End has taken the number one spot, displacing Tokyo and jumping above Paris and Hong Kong.

However, the sharpest falls within the global ranking were recorded in those markets which have seen significant rental growth in recent years, most notably Singapore and Kyiv (Kiev), which both saw occupancy costs plummet by 51% year-on-year (in local currency).

Singapore felt the impact of the global economic crisis particularly badly, as weak occupier demand collided with a substantial amount of new supply to drag down rents and thus total occupancy costs. In Kyiv, demand for office space was severely impacted by the global recession, with take-up in 2009 less than half the volume recorded in 2008. Nevertheless, despite weak demand, the office market in Kyiv remains structurally undersupplied.

Looking ahead to 2013

In the coming year, DTZ expect occupancy costs in the Middle East to either stabilise or decline. Occupancy costs are expected to continue to fall in Doha, Kuwait City and Bahrain, as significant levels of new supply come on line at a time when occupiers are consolidating their business activities and thus adding secondary space to the market.

DTZ forecasts indicate that Asia Pacific will experience the strongest growth in occupancy costs over the next four years as the region's economic growth is expected to continue to surpass that in Europe and the United States. The region features three of the world's top five fastest growing markets in terms of occupancy costs per workstation - Hong Kong, Guangzhou and Bengalaru, which are expected to grow by 8.82%, 4.84% and 4.36% respectively between now and 2013 - with Hong Kong predicted to emerge as the most expensive location in Asia-Pacific, as supply constraints drive increases in rents.

London's West End market is, however, expected to remain the world's most expensive location in coming years, with Hong Kong, Tokyo, Washington D.C. and Paris (CBD) rounding out the top five by 2013. The steepest declines in occupancy costs over the forecast period (2010 - 2013) are expected in Singapore (-1.8%), Chennai (-1.4%) and Glasgow (-0.6%), with the declines being anticipated during the first half of that period.

Magali Marton, Head of DTZ Continental Europe and Middle East Research, comments: "While costs are forecast to be broadly stable on average, there is significant divergence within the regions. In Europe, most markets continue to see falling or stable costs; however the volatile London City market is expected to see a strong bounce back in occupier costs during 2010 due to a lack of supply and a returning demand for space running counter to the broader European trend.  Singapore continues to be impacted from a huge influx of new supply leading to further rental declines, and thus lower occupancy costs.

-Ends-

The Global Occupancy Costs - Offices report, a guide to total office occupancy costs across 116 business districts in 47 countries and territories, is DTZ's 13^th annual survey and assesses the main components of occupancy costs in major office markets across the globe, ranking each location based on annual costs per workstation.     

DTZ is a leading global real estate adviser with a team of over 10,000 people operating under the DTZ brand across 148 cities in 43 countries providing solutions for clients around the world. Its client-focused activities range from high quality capital market solutions, to cutting-edge occupier-led property services and advice. The comprehensive service offering across Europe, Middle East & Africa (EMEA), Asia Pacific and The Americas is based upon detailed local knowledge backed by first-class research. With its full-service expertise spanning all real estate sectors, DTZ offers a global solution to meet each client's particular property-related investment and business needs. The parent company, DTZ Holdings plc, has been quoted on the London Stock Exchange since 1987. www.dtz.com

[1] DTZ's survey calculates the standard space used per workstation by dividing the net usable area by the number of planned workstations for which the space is intended.  The survey takes into account the amount of space required in different business districts throughout the globe.

For further information please contact:
Rachel Maynard
Regional Marketing Manager
Tel: +971 2 667 4492
Email: rachel.maynard@dtz.com 

© Press Release 2010