• Total office supply in Dubai expected to rise to 70 million square foot by the end of 2012, with vacancy levels exceeding 40%;

• Office rents in prime locations begin to stabilise, due to stronger demand from occupiers choosing to locate in these areas;

• Despite the excess of supply, there still remains a relatively short supply of good quality commercial buildings, especially for large occupiers;

• The hospitality market leads the way in the sector with continued expansion in terms of visitor numbers and hotel projects

Dubai, UAE; 15 April 2012 - Cluttons, the real estate specialist that has enjoyed a dedicated Middle Eastern presence since 1976, today announces its Q1 market report for Dubai's commercial market 2012. The office sector remains highly competitive due to the high levels of supply in the Emirate - touching on 60million square foot, with an additional 10 million anticipated by the end of the 2012.

The effect of such high supply is that vacancy rates have remained high at approximately 40% across the city. However, instead of ongoing downward pressure on prices experienced throughout 2010 and 2011, Cluttons notes that average quoting rents for prime developments in the city have remained stable over the past three months. DIFC, Emaar Square and the Sheikh Zayed corridor remain the most expensive locations, with JLT, Barsha and Tecom offering the lowest rates (Figure One).

Despite the excess of supply, there still remains a relatively short supply of good quality buildings for corporate occupiers with major requirements. Single landlord owned buildings still remain an essential requirement for most larger corporate occupiers but there is a lack of supply in prime areas of buildings that can accommodate larger requirements over 40,000 sq ft. Cluttons is noting a greater appreciation of 'green' or sustainable initiatives from occupiers and the market is seeing evidence of this becoming a regular requirement in the search process.

In terms of development going forward, initiatives have been put in place with an aim to restart work on previously stalled projects. There remains however an increased recognition by government agencies to reduce the future supply pipeline. Due to the lack of good quality stock there is an improved appetite for prime situated development sites.

The retail market within Dubai experienced a supply slow-down during 2011, however the recently announced extension of Dubai Mall and the planned Mall of Arabia which has now been, signal that retail supply will be a strong focus for 2012. Cluttons are also seeing a small growth in developments within the smaller community shopping centres, which were designed to support local residences. .

Finally, the hospitality sector is probably the furthest ahead in the performance cycle in terms of all of the commercial sectors. Increasing visitor numbers (particularly from new markets of Africa and China), the continued expansion of Dubai's tourist infrastructure and its 'safe haven' reputation will remain instrumental to its resilience during 2012. There is now an emphasis on mid-market hotels, not just luxury ones, and several hotels are considering the feasibility of refurbishment, or in the case of the Metropolitan Hotel, complete redevelopment.

Cluttons LLP is an independent partnership of chartered surveyors founded in 1765. With a network of offices in the UK, Europe, Middle East and South Africa, Cluttons LLP offers a wide range of professional property management, agency and consultancy services across the commercial and residential sectors, for both investors and occupiers. For further information, please see: www.cluttons.com

Issued by:
Sophie Toh
Sophie Snow
Toh Public Relations
Tel: 00971 4 354 9212
Email: sophie.snow@tohpr.com

© Press Release 2012