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The cost of leasing offices in Dubai is expected to rise significantly over the next several months due to supply constraints in the market, an industry source said on Tuesday.
The rent increases over the next 12 months are more likely in “double digits”, as strong demand has been outpacing supply significantly, according to Khawar Khan, Head of Research, MEA & Turkey at JLL.
“There aren’t enough deliveries in the market… Demand is outpacing supply significantly,” Khan said at a briefing hosted by the real estate consultancy firm.
As of the third quarter of the year, Dubai’s office market had a total stock of 9.1 million square metres of gross leasable area (GLA), according to JLL’s research. The supply is expected to grow before the end of the year, with an additional 53,000 square metres scheduled for delivery in the fourth quarter.
In Abu Dhabi, the total stock stood at 3.9 million square metres, but there are no planned deliveries towards the end of the year.
Demand for office space has picked up since employees started returning to office from remote work. Dubai has been showing strong economic growth since the COVID-19 lockdown, while the influx of new businesses has been growing.
In a separate report, Asteco said that demand for new office space increased in the third quarter of the year.
“Although office rental rates were relatively stable over the last three months, there was an increase in demand for new space, which is likely to be reflected in an improvement in rental rates in the next quarter,” Asteco said.
(Reporting by Cleofe Maceda; editing by Daniel Luiz)
