Saturday, October 18, 2008

Commercial property prices in Dubai may slow down

With more supply hitting the market, the rise in commercial property prices are bound to slow down, indicate recent reports.

Dubai has begun discouraging short-term investors, with few commercial buildings being listed at a negative premium. A commercial review by Better Homes, suggests that with the liquidity being squeezed in global markets, more such instances are likely to occur.

The global recession has created panic in terms of sentiment. Several projects being launched this year are exceptionally highly-priced in the range of Dh.4000 to Dh.5000 per square foot, when compared to last year.

Such prices are agreeable when things are going good and fine, but when the projects are three to five years away from completion, a slowdown is inevitable, says Niraj Masand, Managing Director-Commercial Advisory, Better Homes.

In the third quarter of this year, an increase in activity, and better interest towards commercial properties in Jumeirah Lake Towers, Meydan, Dubai Waterfront and Dubai Maritime have been noticed.

Rents are however, very high for both primary and secondary offices. The rates for office space range from Dh.250 to Dh.275 per square foot in old commercial areas such as Bur Dubai and Deira, while the rent is Dh.500 to Dh.550 in new places such as the DIFC and Jumeirah Lake Towers.

Just as is the case with residential sector, the demand continues to surpass supply in the commercial sector too, which has led to inflated rents. This indicates that on purchase of such properties, investors gain good returns for their investments, and this is a huge opportunity for speculators, Masand pointed out.

No comments: