Ten key locations for office properties were affected by rental dips last year, as per Cluttons report
Dubai:Businesses looking for a cheaper rental alternative to their current office locations should head for Al Garhoud, Al Barsha or Deira.
Offices at the upper end of the official rental range in Al Garhoud declined 18.2 per cent to about Dh90 a square foot last year, says the consultancy Cluttons in a new report. In Al Barsha, they were down 10 per cent and Deira’s top-end office premises faced a squeeze by 9.1 per cent.
“Throughout the course of 2016, 10 of the 23 submarkets we monitor registered decreases in upper limit rental rates,” states the report. Leasing activity, however, remained muted through the better part of the second half.
Among the best performers were DIFC (now averaging Dh370 a square foot at the top end from a 5.7 gain over the year). “For now, core building experience very low vacancy rates of sub-5 per cent and we expect this to persist,” the report added. “The shortage is this part of the DIFC is hampering activity … however, we have recorded a few small relocation deals within the finance and banking sector of under 3,000 square feet.”
New and substantial stock will come about in DIFC only by early 2019, in the form of the $1 billion ICD Brookfield Place, offering 900,000 square feet of prime office space. There is also the One Central, part of the Dubai World Trade Centre precinct, where two new buildings — under phase 2 — are due for completion later in the year. “The successful rate of take-up has prompted the awarding of the Dh723 million construction contract for phase 3.”
This will see two additional office buildings with a combined 1.96 million square feet and to be ready by late 2018. (The first two phases created 904,000 square feet.) In terms of leasing, a big one would come in the form of Amazon Web Services’ new base in Dubai. Other tech giants are also boosting the demand patterns for space in internet and Media cites.
“However, with a limited amount of space available, interest is likely to rise in complimentary free zones such as Dubai Science Park, where the main HQ building is due to complete in Q,” the report says. (The current pre-lease is at the Dh110 a square foot level.)
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