Demand for office space in Dubai has fallen over the past six months in the wake of the oil price rout and the economic slowdown elsewhere in the Gulf that dampened the need for commercial space, Cluttons said in a report.
The consultancy’s bi-annual Office Market Bulletin found that rents for commercial property remained largely flat as companies retrenched staff and considered future strategy. It said decisions on whether to acquire, expand or move had largely been put on hold, which has led to an exaggeration of the typical summer season slowdown.
Rents remained largely stagnant in the second quarter, with falls in six out of 22 submarkets. Rents in older buildings in certain areas fell, such as Garhoud (18 per cent), Al Barsha (10 per cent) and Deira (5 per cent). However, there were a few submarkets that reported gains at the upper end of the market such as Dubai International Financial Centre (DIFC) with a 6 per cent increase and in Tecom with a 7 per cent increase.
“Free-zone areas have remained in relatively high demand,” said Murray Strang, the head of Cluttons’ Dubai office. “This includes areas like Tecom’s Dubai Internet City, Media City and Knowledge Village, DIFC and Dubai Design District, which all contain internationally recognised Grade A space.”
He said that prime areas of these free zones have low vacancy rates of about 5 per cent, compared with 20 per cent in Sheikh Zayed Road.
The consultancy said that despite the flat market, it did not expect significant falls in commercial rents. Faisal Durrani, the company’s head of research, said that it expects “a period of minimal rental change for at least six to nine months before there are any signs of an uplift”.
According to Dubizzle’s most recent second-quarter report, the most popular areas in Dubai for buyers of commercial property are Business Bay (Dh1,200 per sq ft), Jumeirah Lakes Towers (Dh1,094) and Downtown Dubai (Dh2,850). The most popular areas for renters were Deira, Business Bay and JLT.
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