The latest Q3 commercial market report for Dubai by Cluttons, the leading real estate specialist in Dubai, indicated an improvement in tenant activity as vacancy levels in the emirate continue to increase, touching nearly 50percent.
With high levels of supply seen in new commercial area, there is an increase in number of small businesses, offering large choice and competitive rents. But, there is still limited choice for Grade A single ownership buildings meant for regional and international headquarters.
With more office buildings getting completed, more than 12mn square feet is likely to be completed in the market by the year-end. The increase in vacancy rates will continue to put downward pressure on rents in certain areas of the city.
The tenant demand is generally driven by increased affordability of rents and opportunity to move into new offices from old ones. The DIFC has seen increase in vacancy rates over the past quarter, with several commercial buildings being incorporated into the freezone area of the market.
Cluttons has seen increased activity with more businesses on the periphery re-locating their satellite offices back into the core DIFC. Cluttons has also reported the trend of tenats getting relocated to modern offices in the Central Business District area from older districts like Bur Dubai and Deira.
Moreover, the terms by landlords are more flexible and attractive. Several landlords are also taking up the responsibility to pay agency fee so that they can no longer be a liability to the tenant, with the practice being common in foreign market.
According to Cluttons, this scenario will help in taking Dubai property market to a higher level.