Strong demand continues to be generated for premium office space in Dubai, new data released by CBRE, the global real estate consultancy, has shown.
In a statement, the consultancy said that the total office stock in the emirate stood at 9.21 million sqm of gross leasable area (GLA) in the first half of 2018. This represents a 14% from levels previously recorded during the same period in 2014, it said.
Recent completions in the market further highlight the increased focus on Grade A office space – which is a trend that is expected to continue with the expected delivery of 1.1 million sqm of GLA between the third quarter of 2018 and 2020.
The number one location for future office supply is Dubai South, CBRE added, with it presenting 14% of overall future supply. This is largely due its close proximity to the Expo 2020 site, which is expected to attract 25 million visitors to the region over a six-month period, it said.
Other key locations include Sheikh Zayed Road (11%), Barsha Heights Dubai/Dubai Media City (12%) and Dubai Silicon Oasis (10%) and DIFC (8%). According to the CBRE data, average occupancy levels for prime office space across the emirate are estimated at 90%, while the number of strata-owned buildings decreasing from 73% of total supply in 2014 to 36% this year.
“These figures highlight the continued demand for single-owned buildings, particularly those located in prime locations. The trend towards high-quality offices with amenities that incorporate sustainability and energy efficiency, whilst promoting wellness in the workplace, remains strong. We also see a growing trend towards tenants willing to sign longer term leases in excess of five years to secure quality space,” commented Simon Townsend, head of Strategic Advisory, CBRE Middle East.
Townsend added that the recent landmark law that enables 100% foreign ownership of companies is also expected to have a significant impact on the commercial property market. This trend is likely to continue in the aftermath of Expo 2020, which is likely to further enhance the attractiveness of Dubai as a regional and global business hub, he pointed out.
“We expect the demand for premium office space to continue as more larger corporates consolidate their offices and free zone companies look to operate outside of their free zone boundaries following the introduction of dual licensing.”
As per figures released by CBRE, the total residential stock in Dubai stood at 516,000 residential units as of H1 2018. Over the last five years, an average of 20,000 units have been delivered per year, and with Expo 2020 approaching, this is expected to continue at an increasing pace.
Growth momentum remains strong with approximately 130,000 new residential units currently under construction – and potentially scheduled to enter the market from 2018-2020, the CBRE report said.
The top five locations for future supply include Dubailand, Mohamed Bin Rashid City, Dubai Creek Harbour, Jumeirah Village Circle/Triangle and Dubai South.
“It is, however, unlikely that all of these projects will complete on time as historically, the market witnessed supply delays due to a change in market trends or slower than expected absorption as the delivery dates may be adjusted and some of these projects may enter the market slightly later than originally planned,” observed Townsend.
“Whilst the downward trend in residential sale prices has continued in the first half of 2018, it has not dented the spirit of developers who are continuing to offer advantageous payment plans and incentives.”
As a result, Dubai’s residential market has witnessed a growth in transaction values and volumes, while a large number of new and first-time buyers are purchasing property in Dubai, having previously found access to properties within the budget ranges sought to not always be available or suitable, he added.