Dubai Design District was the only area to show an increase in rents in the third quarter, with an average 15% rise
Average office rents in most submarkets of Dubai were flat or fell during the third quarter, according to Core Savills.
Rents in six areas – Sheikh Zayed Road, DIFC, Tecom, Business Bay, Deira and DAFZA – were unchanged during the period, the latest Dubai Office Report shows.
Average prices in Downtown Dubai, Barsha Heights, JLT, Bur Dubai, DHCC and Garhoud all declined by between 2% and 6%, the property services firm said.
Dubai Design District was the only submarket to show an increase in rents during the third quarter, with an average 15% increase.
“After a very active June 2016, early Q3 showed signs of the traditional summer sluggishness. However, activity levels picked up again in September – albeit keeping the average rentals flat across most submarkets,” the report found.
“Occupancy levels have moderately edged upwards in Q3 2016 and we expect many of the current prospective tenants to transact in Q4 2016 and early Q1 2017 as both local and global occupiers firm up their next year real estate budget allocations.”
The report showed many variations according to submarket, with smaller offices in Dubai International Financial Centre (DIFC) commanding a 15-20% higher rent due to a lack of availability of similar unit sizes.
“Corporate tenants sometimes assume the commercial market will mirror residential market dynamics. However, the former is more complex, with each sub-market at different stages of the real estate cycle, influenced by a variety of drivers,” said Core Savills CEO David Godchaux.
“There are many submarkets – both freezones and onshore areas – that are following distinct dynamics and may be at a different stage of their real estate cycle. For example, areas such as DIFC, Tecom and D3 have been facing steady upward pressure on rents while other economic clusters are witnessing a varied level of rental drops over the last few quarters.”