Dubai’s office demand remains buoyant despite oil price fall
Prime rents remain flat q-o-q 2015, up 2.1% in past 12 month: Knight Frank
Dubai’s economy has continued to grow despite the drop in oil prices, with leasing enquiries remaining buoyant, according to Knight Frank report.
“While the world keeps a watchful eye on the oil price movement which has muted certain corners of the market, and where corporate decision making is pegged to global market sentiment, on the whole leasing enquiries within Dubai’s commercial real estate market remain buoyant,” the UK-based consultancy said in a new report.
Dubai’s economy has continued to grow despite the drop in oil prices which is testament to the city’s diversification across various sectors including finance, logistics, tourism and retail, which has been reflected in the types of companies actively searching for new office accommodation during the second and the third quarter of this year.
The office market experienced a healthy level of demand in the third quarter, following a slightly longer and sustained drop in occupier sentiment over the Ramadan period which, this year, found its way rolling into the summer months.
Signs towards the latter end of Q3 suggest that occupier demand for the remainder of the year will remain strong. With tenant’s end of year decision making window now noticeably shorter, this has provided added stimulus and urgency to businesses who now need to move quickly in order to secure premises for occupation by Q1 2016.
Occupier activity continues to be seen in the shape of expansions, new start-ups, consolidations and renewals which has further reduced vacancy levels, especially within prime office developments where the supply of available space remains low.
“While there are signs economic momentum is slowing, levels of activity remain robust. Dubai’s economy has continued to grow despite the drop in oil prices which is testament to the city’s diversification across various sectors including finance, logistics, tourism and retail.
“The healthy level of demand and low supply of prime office space has helped to exert continued upward pressure on rents. Prime rents were again flat quarter-on-quarter (q-o-q), but were up 2.1 per cent from a year earlier,” Knight Frank said.
The third quarter kept a close eye on the delivery of a number of well-specified prime office developments designed to cater for a growing level of occupier demand, with the consultancy expecting construction of a number of Grade A developments which are coming out of the ground in order to satisfy both on shore and off shore demand now close to completion.
Tecom’s D3 development at the Design District is the first to come on line with the initial phase delivered in March and set to complete by the end of this year. The new office development at the Trade Centre, expected to be delivered also in the fourth quarter 2015, will also add some much needed grade A supply to the market.
Lack of well delivered office space within the Dubai Multi Commodities Centre has seen the emergence of One JLT expected to be delivered in the fourth quarter 2015, and unveiling of Burj 2020 development. Besides, Dubai International Financial Centre will also get a 50-storey office tower being developed by ICD and Brookfield joint venture, the consultancy said.
By Parag Deulgaonkar
Published Thursday, October 15, 2015.