DUBAI, 24 April 2007 — Office tenants in Dubai can look forward to a decrease in rents and a greater number of location choices as high rates of commercial construction activity come online, Colliers International, one of the top three global real estate consultants, said.
In the company’s Global Office Real Estate Review 2007, Dubai is ranked third in terms of global office real estate construction activity, behind Moscow and Shanghai.
The emirate has in excess of 27 million square feet of confirmed activity currently under construction — nearly double the existing CBD inventory of 15.86 million square feet.
“To put that in perspective, that’s approximately the same amount of office space as Geneva, Rio de Janeiro, Beijing and Singapore,” Ian Albert, regional director of Colliers International, said.
“As a result, this influx of space is expected to reverse the current supply-demand dynamics that characterize the market,” he added.
“Despite strong latent demand for office space, the sheer volume under construction combined with the period of delivery will have a marked impact on the competition between landlords, with a concurrent softening of rental levels and a greater number of tenant incentives on offer.”
Colliers anticipates the volume and timing of forthcoming supply will shift the market’s favor from landlord to tenant.
At present, Dubai’s prime commercial property rents are still on the rise, with rents in Dubai’s Central Business District offices registering steady increases over the past nine months.
According to the Global Review, leases on high-end (Class A) and premium (Top Class A) space are achieving rents between $62 and $83 per square foot per annum, respectively — up from $48 and $60 for the same in June 2006.
Despite these considerable rental increases, Dubai is still significantly less expensive than London, Hong Kong, Tokyo, Moscow, Paris, Dublin, New York and both Mumbai and Delhi, and ranks 13th in Colliers’ Global Survey of the top 25 Office Occupancy Cost destinations.
“Even with many of the world’s financial centers registering sizeable rent increases in the last nine months, Dubai has managed to maintain its reputation as one of the most competitive global cities to rent office space,” Albert added.
