Though Dubai’s office rental market has shown stability in 2017, declines of 4% to 5% are likely next year, according to a report.
The Cluttons Dubai Winter 2017 Property Market Outlook reports the office market has remained flat, with 13 submarkets monitored seeing no movement in headline upper limit rents during the last year.
The property consultancy believes Dubai’s office rental market will remain the same towards the end of 2017, but could show potential declines in the year ahead.
Though overall 2018 is likely to be another stable year for the city’s office market, any declines are likely to be contained at 4% to 5% at most, the report indicates.
Paula Walshe, head of Corporate International Services, said: “Dubai’s office market has been far more resilient than its regional peers, owing to the diverse nature of occupiers, which of course is linked to the emirate’s heavily diversified economy.”
The market has continued to face stagnant growth over the course of the year, with an earlier report noting “weaker-than-normal demand” in most areas across the city’s office market.
“With the market remaining fragmented and the impending introduction of VAT, office rental rates have held up reasonably well in many submarkets,” Walshe said.
One of the strongest areas for this segments remains Dubai International Financial Centre (DIFC), which has seen almost 100% occupancy throughout the year.
Outside DIFC owned stock and beyond core DIFC buildings, however, rents have shown some weakness, although where vacancy rates are sub 5%, they have held up reasonably well, according to the report.
“We expect the completion of Gate Avenue in spring 2018 to enhance the attractiveness of many of the more competitively priced peripheral buildings which will now be connected into the amenities around the DIFC core,” Walshe said.
“This has prompted developers to move forward with plans to bring forward new space, such as the $1bn ICD Brookfield Place, which is due to complete in roughly 18 months’ time.
“The building is positioning itself as the next generation Emirates Towers, offering unrivalled amenities and facilities that are expected to aid its pre-letting,” she added.
The lead up to Expo 2020 will still present an advantage for the market moving forward, creating fresh demand for office space as companies expand.
It may also present an opportunity for companies to set up shop in greater numbers across the emirate to help deliver the ambitious construction and infrastructure projects in the lead up to the event, Walshe added.