Wednesday, September 30, 2009

Dubai office rents slide 63 percent, likely to fall further

The rentals for office space in Dubai have dropped by 63 percent during the past nine months, but prices are likely to fall further for the reminder of the year and in 2010, as a dearth in demand has been noticed, along with abundance of new supply, which will keep the office space leasing market sluggish, particularly the free zone areas, reports CB Richard Eliis (CBRE)-Middle East, the leading property consulting company.

Average rentals at the Jumeirah Lake Tower area have dropped to Dh.70 to Dh.120 per square feet from Dh.240 to Dh.280 during the third quarter last year.

Office space from private developers in Dubai Silicon Oasis now averages between Dh.50 per square feet and Dh.85 to Dh.130 in Dubai Internet City, Jebel Ali Freezone, Media City, and Airport Free zone. No comparative figures have been provided.

The global economic crunch has badly hit the real estate market in Dubai, with the prices having halved from their peak values in September 2008, hitting both residential and office space sectors.

The large expatriate population in Dubai that fuelled the five-year property boom, dwindled this year, with thousands losing their jobs and being sent back home as the companies cut down operations.

The office space leasing market will have to witness more tough times, as the current stock will face stiff competition from new supplies coming on stream. The office space available in third quarter this year has more than doubled, touching 5.2mn square feet from the 2.5mn square feet space during third quarter last year, said Faheem, Research Analyst at CBRE Middle East.

During the rest of the year and in 2010, the leasing market in these areas will continue to remain sluggish, largely due to additional pipeline stock expected to enter from free zone developments and non-free zone areas such as Business Bay development.

No comments: