As the Dubai residential property market continues its resurgence, what of the commercial space?
The average asking rents for prime office buildings in Dubai has remained unchanged over the past year, according to the latest Jones Lang LaSalle report.
In fact, prices have been flat since the end of 2010, with space in Dubai International Financial Centre (DIFC) attracting prices of AED 2,370 per sq m, down from a Q4 2009 peak of just under AED 4,500 per sq m.
Prices elsewhere in Dubai saw more modest falls with prime rent in the central business district (Excluding DIFC) at AED 1,615 per sq m, compared to AED 2,500 in 2009, with citywide rent elsewhere attracting slightly lower prices.
With a further 1.4 million sq m of office space due to come online in 2013, the trend for rental prices in the commercial sector looks set to remain for another 12 months at least, even as more international companies relocated to Dubai as the economy strengthens. Expect office space in secondary locations to continue to fall in the short term.
However the macro perspective for office space in the Dubai property market shows signs of opportunity. As residential prices continue to improve, due to a growing population (50% of the UAE population is under 20) and positive sentiment, companies will need to expand their workforce, and with it their office space in the coming years.
The UAE is the most confident country in the Middle East according to a recent Nielsen survey and the World Bank rated UAE 2nd in a list Arab countries for ‘Doing Business in 2012’ due to the friendly business policies, government supported initiatives and simple registration procedures.
The Dubai economy is also targeting growth of 4.5% in 2012 according to Dubai Supreme Fiscal Committee – 50% higher than 2011 and up from 2.5% in 2012.
Having said that, supply is outstripping demand for the commercial sector at the present time and a delicate global economic outlook, especially in Europe, will continue to impact on the short to medium-term expansion plans of international companies.
It is going to take a concerted effort to attract new business into Dubai, highlighting the tax-free benefits, ease of doing business and ideal geographical location to entice overseas companies. The emirates pitch to host the World Expo 2020 on the eve of the countries 50th anniversary will certainly reignite the global focus on Dubai and drive new investment.