Consultants JLL says outlook for the office sector in Dubai remains muted as firms seeks cheaper options
Office vacancy rates in Dubai currently stand at 14 percent, highlighting the continued demand for high quality and ‘smart’ buildings, according to real estate consultants JLL.
Its Q1 2017 Dubai Real Estate Market Overview report said the Greens area dominated new supply, with the two Onyx towers adding 66,000 square metres of gross leasable area (GLA) to the market during the first quarter of 2017.
These strata titled buildings are the first completions of new office space in this location since 2006, JLL said, adding that the pipeline for the remainder of the year remains relatively active, with approximately 235,000 square metre of GLA expected to enter the market.
JLT contributes the largest share of this total, adding 60,000 square metres of GLA during the second quarter of the year, with only 15 percent of completions in the commercial business district (CBD).
JLL said that with more tenants looking to consolidate to cheaper locations, the outlook for the office sector in Dubai remains muted.
Despite the limited new demand, vacancy rates in the CBD started to decline in Q4 2014, and have continuously marked downfalls since then.
"Dubai has long been characterized as a city, which follows trends of innovation, with the office sector being no exception. As the demand for ‘smart’ offices increases, tenants will increasingly seek space in these buildings and thus, we believe it’s the quality buildings which will continue to do well," said the report.
“While we recognise that the MENA region is perhaps not directly at the forefront of revolutionising the workplace, the young, dynamic, innovative nature of the region, especially Dubai, means its real estate markets are likely to implement and adjust to these changes rapidly over the next 20 years,” said Craig Plumb, head of research.