Tuesday, March 03, 2009

Dubai, Abu Dhabi, witnessing lack of demand for office space

Dubai has been increasingly witnessing a lack of demand for commercial plots, reports CB Richard Ellis (CBRE), the real estate services company.

The latest report by CBRE said that although there is no considerable change in the office lease market during the fourth quarter, prime rents saw a growth of 29 percent year-on-year.

Speaking about the commercial rental growth from 2004-08, the firm says that much of the new entry during the fourth quarter was located in Al Barsha and Freezone developments of TECOM.

With only limited new offices entering the market, a drop in lease is not yet apparent. A correction in rentals is necessary during the first quarter 2009, admits CBRE.

CBRE is expecting more drastic declines and considerable increases in the availability of incentives for landlords. It expects a rent correction during the first quarter 2009. According to CBRE, the other districts are likely to see a more notable decline and marked increases in availability of landlord incentives.

Speaking about Abu Dhabi, CBRE mentioned that a situation of uncertainty is evident in the subdued commercial rental market. Demand for office accommodation dropped considerably in the prime segment, leaving an impact on rental rates.

Under the present conditions, more opportunities would be presented to developers and end-users, and the developers would get more cautious, by pursuing only well-planned premium quality projects and end-users would benefit from better quality property product as a result, CBRE's report said.

According to real estate services firm, Abu Dhabi market remains considerably under-supplied across all property sectors, offering a conducive environment for growth, estimates CBRE.

The firm considers that this year would be the right time for Abu Dhabi government to lay-down the much awaited property regulations befitting a mature market, which would not only enhance the market appeal, but would also place Abu Dhabi in an international competitive stance.

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