Monday, August 14, 2006

High boomtowns are on the Middle East

Dubai is not the only boomtown in the region for investors in commercial property. Office rents in Abu Dhabi have more than doubled since 2002. In 2005, the average increase in rent across the city stood at 10 per cent, rising to an alarming 46 per cent in the first six months of 2006. The struggle to find commercial spaces continues with vacancy rates hovering around one per cent, according to research released by global commercial property marketing and research firm Colliers.

“The lack of prime-quality space is particularly marked. The quality of existing office stock is low with buildings throughout the city ageing and in need of upgrade.

“Prime buildings are generally reserved for the public sector, and with large domestic corporations tending to owner-occupy, the amount of space available to the private sector is relatively small,” Colliers said.

However new projects planned or under construction should improve the quality of available stock. “Planned projects indicate that approximately 500,000 square metres of office space will be added to the market between 2007 and 2011. This should satisfy current latent demand,” Colliers said.

With near total occupancy throughout 2005 and into 2006, office space is at a premium in Abu Dhabi. Colliers estimates that approximately 13,000 square metres of Class B supply will be made available to the market throughout 2006. The other boomtown in the region is Qatar. Like Dubai, almost 87 per cent of Qatar's real estate development is currently centred around the residential segment, and is driven by ownership and resale laws that allow foreigners to trade in property in designated areas.

In fact, similarities with the Dubai property market have prompted a recent research report to conclude that Qatar will be the next Dubai.

“Considering the economic boom that the country is currently experiencing, and the huge inflow of expatriates, supply is extremely deficient.

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