Demand continued to outstrip supply in Dubai’s office rental market in Q2, 2015.
This drove strong office rental growth rates in the emirate’s Central Business District (CBD) and across most of Dubai’s secondary locations, according to studies conducted by the TFG Asset Management research team.
Dubai’s office supply stood 7.8 million square metres as of June 2015 (the end of Q2), an increase of 200,000 square metres compared to Q1, TFG Asset Management’s research revealed.
Despite the hike in supply, the rate for office rent in Dubai CBD increased from 1,860 AED per square metre in Q1 to 1,880 AED per square metre in Q2, signaling opportunity for growth.
This argument is further compounded by reliable sources such as Jones Lang LaSalle (JLL), which revealed the office vacancy rate declined by a marginal two percentage points from 25% in Q1 to 23% in Q2, despite the rise in rental rates.
“There are also office development opportunities in secondary locations such as Dubai Sports City, Dubai Motor City and Studio C where rental rates and demand both continue to grow,” said Head of TFG Asset Management Mariano Faz.
“These districts are strategically located, close to Dubai’s premium sporting facilities, several mixed-use development projects as well as the World Expo 2020 site in Jebel Ali, which is expected to attract 25 million extra visitors during the six-month event. These factors combined will drive strong office rental growth rates over the next five years.”
Faz noted how The First Group had stolen a march on the competition in locations such as Dubai Sports City where the company operated the district’s first and only office building – SOLO Business Centre.
“The business centre continues to receive high pre-lease interest and is currently expanding its office unit supplies with anticipated office rental growth rates in mind,” he added.
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