Rental rates for offices in Dubai have tripled on average since 2005; rising from Dhs90 per square foot in 2005 to Dhs270 today, according to a report released at Cityscape today.
Property consultant Asteco says that rental rates have rocketed due to spiralling demand for space from multinational companies moving into Dubai, while supply has been squeezed because of delays to office building.
However, the pressure could ease over the next two years as office space under construction reaches the market, the study suggests.
"We expect commercial office rents to remain high throughout 2007 and 2008 mainly due to construction delays. However, by 2009, a significant amount of new supply will reach the market which will address this strong demand and ease rental increases going forward," said John Allen, Director Research Valuation and Consultancy at Asteco.
With supply falling short of demand, rent increases have been consistently strong in 2007 with Dubai office rentals showing an increase of 55 percent on an average over the past year.
According to Asteco's third quarter rental research, rents on Sheikh Zayed Road have jumped to Dhs350/375 per square foot compared to Dhs220/240 in 2006.
"With escalating rents demand for outright purchase of commercial units has also increased as Dubai's office market offers one of the highest returns worldwide - more than 20 percent - as prices are relatively lower here compared to international markets," added Andrew Chambers, Managing Director of Asteco.
The completion of office blocks in Dubai Business Bay will significantly ease pressure on prices. It is expected to provide approximately 28.5 percent of the city's total expected supply of 50.1 million square feet by 2010. Other key areas such as Jumeirah Lake Towers and Dubai Investment Park will also contribute substantially with an additional 17.8 percent and 16 percent of office space over the next 24 months. Source
Property consultant Asteco says that rental rates have rocketed due to spiralling demand for space from multinational companies moving into Dubai, while supply has been squeezed because of delays to office building.
However, the pressure could ease over the next two years as office space under construction reaches the market, the study suggests.
"We expect commercial office rents to remain high throughout 2007 and 2008 mainly due to construction delays. However, by 2009, a significant amount of new supply will reach the market which will address this strong demand and ease rental increases going forward," said John Allen, Director Research Valuation and Consultancy at Asteco.
With supply falling short of demand, rent increases have been consistently strong in 2007 with Dubai office rentals showing an increase of 55 percent on an average over the past year.
According to Asteco's third quarter rental research, rents on Sheikh Zayed Road have jumped to Dhs350/375 per square foot compared to Dhs220/240 in 2006.
"With escalating rents demand for outright purchase of commercial units has also increased as Dubai's office market offers one of the highest returns worldwide - more than 20 percent - as prices are relatively lower here compared to international markets," added Andrew Chambers, Managing Director of Asteco.
The completion of office blocks in Dubai Business Bay will significantly ease pressure on prices. It is expected to provide approximately 28.5 percent of the city's total expected supply of 50.1 million square feet by 2010. Other key areas such as Jumeirah Lake Towers and Dubai Investment Park will also contribute substantially with an additional 17.8 percent and 16 percent of office space over the next 24 months. Source
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