Dubai Offices market Rents Stabilized

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According to the report, the trend reflects the growing buoyancy in the emirate’s property market.

According to the latest research by a global property consultant, reflecting the growing buoyancy in the Dubai property market, prime headline office rents have started to stabilize.

However, rents remain at nine-year lows overall, leaving occupiers firmly in the driving seat, according to the research published in Knight Frank’s biannual Summer 2021 Dubai Office Market Review.

The report said business confidence in the UAE had been a critical factor in improving conditions. In addition, the latest purchasing managers’ index figures showed sustained business expansion activity for seven consecutive months, highlighting the positivity percolating through the economy as it shakes off the lingering impact of the pandemic.

“Job creation rates have quickened at their fastest pace since the end of 2019, and that is helping to underpin the rise in office space requirements Knight Frank is recording,” Knight Frank analysts said in their report.

“And the technology-media-telecoms (TMT)sector sits at the heart of new demand for office space, with over 22 percent of all new requirements in the second quarter being linked to TMT businesses.”

Knight Frank expects about 100,000 new jobs to be created across the UAE by the TMT, storage, and transportation sector over the next five years – the most for any sector.

“Dubai’s global hub status and reputation as a center for innovation are drawing in tech start-ups from around the world, but these businesses too, like their more established blue-chip counterparts, are eager to occupy sustainable buildings, and the availability of such space remains limited across the city. This is both a challenge and a clear opportunity for landlords, developers, and investors,” Faisal Durrani, partner – head of Middle East Research at Knight Frank, said.

He said the big challenge would be how landlords and businesses will attract workers back to their desks in a meaningful way.

“We know the green agenda will be core to this and is likely to influence the real estate decisions of nine out of 12 businesses in the future, so landlords are in a way being presented with a roadmap to safeguarding future demand and, therefore, income.”

As Dubai’s prime office stock in core location ages, the calls to refurbish will grow louder, or such assets could potentially face rising voids and potential obsolescence, he said.

Bur Dubai is an example of a growing gulf between the quality of stock available and what businesses want. This mismatch has contributed to the 20 percent drop in rents in the area over the last 12 months, said the report.