Decline In Demand for Dubai Office Spaces

Tuesday, 16th August 2016

The current decrease in oil prices and the economic slowdown in GCC have resulted in a decline in demand for office spaces in Dubai over the past six months, according to latest study conducted by Cluttons International Real Estate Consultancy, Trade Arabia reported.

The study indicated that current companies seek to reconsider their future strategy and reduce staff in efforts to meet global economic challenges, which makes it less likely for them to expand or move office space currently. As a result, an increase occurred in the summer slowdown late Q2 and early Q3 in 2016.

Head of Cluttons Murray Strang said free zone areas were in moderately high demand, including areas such as Tecom’s Dubai Internet City (DIC), Media City (DMC), and Knowledge Village (DKV), and Dubai Design District. These places all feature Grade A space, according to Gulf Digital News.

He added that the prime, central areas of these free zones have very low vacancy rates of about 5% compared to supermarkets in Sheikh Zayed Road, which has vacancy rates of about 20%.

Rents are not predicted to decline further, according to the study, as they are considered at market value. The general lack of rental growth is unlikely to change in the short term.

There are also a number of supermarkets that have defied the decline trend, and have exceeded the upper limit figures because they’re considered flagship, prime, or signature schemes; for example Burjuman Business Tower demands rent above the circa AED 120 per square foot rate due to the unique quality of the office space.

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