Wednesday, May 06, 2009

Dubai free zones record significant drop in rent rates

With the drop in demand owing to global economic crisis, rents for office spaces in Dubai Free Zones have also dropped considerably, noted an industry analyst.

The Research Analyst at CB Richard Ellis, Mohammed Faheem, said that the average rates of privately managed buildings in the free zones have dropped from the Dh.240-380 per sq ft range, to Dh.92-180 per sq ft during the first quarter of this year, thereby indicating a 52 to 61 percent drop.

This is a clear indication of decrease in demand. The free zones included in the survey were the Media City, Internet City, Dubai Silicon Oasis, Knowledge Village and Jumeirah Lake Free Zone.

Rents within the various zones vary from one another with few zones implementing rate restrictions to stimulate demand from occupiers. The buildings managed by free zone authorities have rents in the range of Dh.170-190 per sq ft.

The Dubai International Finance Center (DIFC), the special economic zone located in the central business district of the city, has fared much better, standing out above the rest of the prime locations in Dubai, with average rents ranging from $115-123 per sq ft. This is mainly because DIFC is a popular location among companies seeking to move in to Dubai.

Although, the lower rent rates in few of the free zones in Dubai, makes it more attractive, it really depends on the motive of the free zone managers. The rents are affected within the free zones mainly because the authorities have a different agenda than the commercial landlords, says Nicholas Maclean, Managing Director, C B Richard Ellis.

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