REAL ESTATE IN DUBAI
25 percent of Dubai office space vacant
About 25 percent of Dubai’s office space is vacant, and the amount is expected to climb further this year, with new buildings being completed, according to a report from Jones Lang LaSalle.
An increase in the number of new offices has helped in easing office rents by an average of 25 percent during the second quarter this year, in comparison to the first quarter. This represents a slow rate of decline, compared to a 45 percent decline in rents witnessed during the first quarter of the year.
The global economic crunch has been a major factor behind reduced demands, as several tenants have either downsized or delayed their expansion plans or have waited to see if the rents settle, said Matthew Hammond, the Head of agency at Jones Lang LaSalle (JLL).
The emirate now has an additional 2million square feet of office space available during the quarter, as per the latest report in the Dubai Office Market.
The total office space in Dubai as of June 2009 is 33.6million square feet. The vacancy rates are in the range of 22 to 25 percent, and are likely to grow further in the next six months, as the supply continues to be released.
In mature markets, typically, a healthy vacancy rate would fall in the range of 10 percent, offering occupiers more alternative options, Ahmad Saidali, Head of Investment at the commercial property consultancy, CB Richard Ellis (CBRE) in Dubai, said.
While the landlords are likely to suffer with increased office space in the market, the fall in rents may help Dubai in getting more competitive and attract potential tenants, JLL said.
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