Thursday, May 28, 2009

Commercial rents drop by 40 percent in DIFC

The Dubai International Finance Centre (DIFC) has seen 40 percent drop in commercial rents during the past six months, reports CB Richard Ellis (CBRE), a leading property consultancy.

The rents have dropped from Dh.750 per square foot to Dh.450 per square foot, and few private landlords are offering further deduction in rents, the report said.

DIFC, being the prime business centre located in the heart of Dubai, commercial rents are far better here, compared to several other areas in the emirate, says Matthew Green, Associate Director-Research, CBRE.

DIFC offers excellent business amenities with high quality office space, generating considerable demand. There was a lengthy wait-list for space in 2008 and the consistency in demand has been continuing since 2004. This is because the firms are seeking quality offices, located in proximity to Sheikh Zayed Road.

The Managing Director of CBRE, Nicholas Maclean, says that the drive in the market is mainly from the financial sector during the past one yea, as the firms want to be located close to DIFC.

Apart from DIFC, the Emaar Square, a business district at Downtown Burj Dubai has also been generating considerable demand, although the Business Bay is the most popular, when it comes to office buildings. Both these projects are on the Sheikh Zayed Road. These properties will soon face stiff competition from the new World Trade Center, he said.

The CBRE report this month said that the prime office rents in Dubai dropped by 18 percent during the first quarter this year, in comparison to the final quarter of last year, dropping from Dh.550 per square foot to Dh.450 per square foot.

The areas most affected by the decline in occupancy and lease rates are Jumeirah Lake Towers and Site C, the areas developed by TECOM, located close to The Greens.

The report states that landlords with properties in localities away from business districts are offering incentives such as relaxed payment terms, to attract tenants.

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