Dubai office rents continue to rise
Office rents in Dubai are still rising, with average prime Central Business District (CBD) rents up 3% quarter-on-quarter and 25% year-on-year, according to the Q2 2014 Dubai MarketView by global property advisor CBRE.
Mat Green, Head of Research & Consultancy UAE, CBRE Middle East, said: “The average prime rental rate now measures AED 1,884/m2/annum and this figure is expected to increase further within the short term amidst strong economic growth and rising business confidence.”
According to the CBRE report, the CBD market also continues to face a diminishing availability of good quality office accommodation, specifically offices that are capable of accommodating large corporate space occupiers over contiguous floors. Occupancy rates within prime CBD offices have been rising steadily over the past 12 months, with less than 16% vacancy rate compared to an average of 40% vacancy for all Dubai office stock.
“Secondary office locations continue to see an improving performance with average rents rising from AED924/m2/annum in Q2 2013 to AED1,148/m2/annum in Q2 2014. This reflects growth of 24% in just one year with a 5% rental growth recorded during Q2 2014,” added Green.
With limited availability of good quality office accommodation in prime areas, we can expect to see demand spill-over into some secondary locations, particularly for single owned properties in close proximity to transport links.
“Office stock in Dubai continues to see significant growth with over 1.8 million m2 set to be delivered by the end of 2017. However, whilst there is a large pipeline of new supply, the majority of this space will be negatively impacted by its strata ownership title. During 2014, almost 0.5 million m2 is scheduled for completion, with over 30% of this total to be delivered in the Business Bay area,” further commented Green.
In the residential sector, CBRE anticipate that both rental and sales growth will continue throughout 2014.