The first few months of the year have seen increased consumer confidence and demand for office space in Dubai that Cluttons predicts will encourage previously stalled developments to restart.
The real estate specialists which has been in the Middle East since 1976, says that Dubai’s retail sector continues to show considerable activity and is led by the pull of the Dubai Mall as a global retail destination.
Despite predictions of price rises, Dubai’s office market is very fragmented, with several submarkets struggling to attract tenants. However, some locations have seen a rise in rents over the past six months.
This has been apparent particularly in areas that suffered most from the property collapse of 2008, including new business districts such as Jumeirah Lakes Towers (JLT), Tecom C, Al Barsha and Business Bay, where commercial rents had previously fallen by as much as 50%. JLT and Business Bay, in particular, have seen a significant improvement in both inquiry levels, take up of space and rising rental levels.
In these locations, Cluttons has seen rents increase by 10 to 15% in better quality and completed projects. Prime space in buildings, such as Almas Tower in JLT, have recently achieved rental levels of AED150 per square foot per annum.
Across the prime Grade A markets, Cluttons continues to note competitive pricing of office space with landlords analysing the demands of tenants more closely. Landlords are splitting units into smaller floor plates and fitting out space in an attempt to attract potential tenants.
Rents in newer buildings on the Sheikh Zayed Road, towards the Trade Centre, are now around AED100 to AED140 per square foot per annum with Downtown and Emaar Square still attracting some of the highest rental levels of between AED140 and AED180 per square foot per annum.
The retail sector continues to show considerable activity across most locations, including both community retailing and malls. Cluttons attributes this to high wealth levels and consumer confidence.
In February 2013, Emaar Properties confirmed that visitor numbers had risen 20% in 2012, with boosted retail sales of 24% year on year. Planned expansion of Fashion Avenue in the Dubai Mall is still on schedule to be complete in 2013.
Elsewhere, annual footfall remains strong in malls such as Mall of the Emirates, Mirdif Mall and Deira City Centre, that target the mid to high level income residents and tourists. These shopping complexes have continued to perform well, says Cluttons, and their successes are demonstrated by their very low to zero vacancy rates.
Mall rents that are within Grade A developments also remain strong at around AED350 to AED500 per square foot per annum.
Finally, Cluttons has observed strong interest in community retail units, established within high density residential districts such as the Marina, JLT and Al Barsha. Rents for these units vary between AED140 to AED300 per square foot per annum…. View more
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