Real estate firm sees increased consumer confidence, higher office demand so far in 2013
Increased consumer confidence in Dubai coupled with higher demand for office space during the first quarter of 2013 will encourage previously stalled developments to restart, Cluttons has said in a new report.
The real estate firm's Q1 study on Dubai’s office and retail property sectors said Dubai’s retail sector continues to show considerable activity and is led by the pull of the Dubai Mall as a global retail destination.
It added that despite predictions of price rises, Dubai’s office market is very fragmented, with several submarkets struggling to attract tenants.
However, some locations have seen a rise in rents over the past six months, Cluttons said, adding that this has been apparent particularly in areas that suffered most from the property collapse of 2008 such as Jumeirah Lakes Towers (JLT), Tecom C, Al Barsha and Business Bay.
In these areas, commercial rents had previously fallen by as much as 50 percent.
"JLT and Business Bay, in particular, have seen a significant improvement in both inquiry levels, take-up of space and rising rental levels," the Cluttons report said.
In these locations, Cluttons said it has seen rents increase by 10–15 percent in better quality and completed projects.
Cluttons added that across the prime Grade A markets, there is more evidence of competitive pricing of office space with landlords analysing the demands of tenants more closely.
On retail, the report said high activity during 2013 was due to high wealth levels and consumer confidence.
In February, Emaar Properties confirmed that Dubai Mall visitor numbers had risen 20 percent in 2012, with retail sales up 24 percent year-on-year. Planned expansion of Fashion Avenue is still on schedule to complete in 2013.
"Elsewhere, annual footfall remains strong in malls such as Mall of the Emirates, Mirdif Mall and Deira City Centre, that target the mid to high level income residents and tourists," Cluttons added.
"These shopping complexes have continued to perform well and their successes are demonstrated by their very low to zero vacancy rates."