During the ongoing Cityscape Global Exhibition 2011 being held in Dubai, Matthew Green, Head of Research and Consultancy for CBRE Middle East, summarized the latest developments in the Dubai property market.
The prime office rents in the Central Business District (CBD) have stabilized, as stable growth has been reflected during three consecutive quarters, which indicates the strength of central office area among wider market weaknesses. New supplies have been limited, and therefore, the vacancy rates have been comparative low over the past 12 months, although there is still 45% vacancy reported across the market.
Outside the prime CBD, office rents exhibit deflationary pressure. This is largely due to migration of tenants from older areas of the city, which pressurizes landlords to compete for tenants and ultimately drive down rents.
A similar situation has also been noticed in Jumeirah Lakes Towers and Business Bay, with major influx of new commercial supplies, which is pushing down prices, leading to huge incentives for tenants.
Metro Green Line
Opening of the new Metro Green line is a huge step in the development of Dubai, with the emirate and UAE in general, continuing to invest heavily into infrastructure, Matthew Green said. This new Metro Line is just another step ahead in evolution of Dubai, as it offers companies with fast and efficient business set-up. This fact was further highlighted during the recent Global Competitiveness Report 2011-12, with UAE being ranked 8th overall for quality of infrastructure.
Dubai International Financial Centre (DIFC) has several projects from private developers that have now achieved handover, while others will be ready in a span of one year. The increased supply at the DIFC estate continues to add pressure to rentals for non-DIFC managed buildings. However, occupancies and rents at the DIFC Gate developments continue to add the precedent for the entire market in terms of rents and occupancies. Prime rental levels in DIFC Gate Building are currently in the range Dh.240-330, inclusive of service charge.
Other Free Zones
The Dubai Freezone will continue to outperform the wider market, by maintaining higher rental levels and occupancy rates within the Freezone Authority buildings, in comparison to that of the private managed counterparts.
The occupiers have expressed satisfaction over quality of office accommodation, and also the standards of property management and amenities from the Authorities, as they are of better quality than the majority of privately managed buildings.
Speaking about the future market, Matthew Green said that an uptick in activity is likely to happen in the final quarter of this year, particularly in office agency and investment markets. For the first time, Dubai’s prime income generating assets will enter the market for sale, and this will generate huge interest in the global investment community.