E-mail Article
Printer Friendly
Share Article
Dubai freezone office rates fall by up to 63%
Lease rates for offices in some of Dubai's freezone areas have fallen by as much as 63 percent year-on-year, a new report from CB Richard Ellis Middle East said on Tuesday.
Freezones which offer benefits including 100 percent repatriation of capital and profits, multi-year leases, and assistance in labour recruitment have seen demand for office space slump during the global crisis, the report added.
Following the success of freezones such as TECOM and Jebel Ali resulted in the emergence of new freezones at Dubai International Financial Centre (DIFC), Jumeirah Lake Towers, Dubai Healthcare City and Dubai Silicon Oasis but these are now struggling as demand continues to drop and new units come on to the market, CB Richard Ellis said.
The research company said in the last nine months it had seen "a notable drop in lease rates" for Dubai's freezones.
"Decline has been felt the most in the emerging new freezone areas of Jumeriah Lakes Towers and Dubai Silicon Oasis, which have suffered heavy drop in price since the beginning of this year," the report added.
The drop in sales rates has seen individual owners extending holding periods and frequently opting to lease their properties rather than looking to sell, it said.
On average, rents in JLT have fallen from AED240-280 per sq ft in the third quarter of 2008 to a current rate of AED70-120 per sq ft.
The report said that a huge increase in available office space - from about 2.5m sq ft in Q3 2008 to 5.2m sq ft - had resulted in weak demand and a drop in lease rates of 63 percent.
Other developments to have also witnessed a sharp drop in lease rates, CB Richard Ellis said, with office space from private developers in Dubai Silicon Oasis typically being offered at AED50-80 per sq ft while in TECOM the rents are in the range of AED85-130 per sq ft.
The highest office lease rates among the freezones are in the DIFC where rates are in the range of AED280-325 per sq ft.
"During the remainder of the year and into 2010 we expect the leasing market in these areas to remain sluggish, largely due to additional pipeline stock expected to enter from freezone developments as well as non-freezone areas such as Business Bay development," the report said.
Quick Links(Residental)
Filter by address:
Comments 1-10 of 10
Posted by James, Dubai, UAE on 10 November 2009 at 21:01 UAE time
DMCC is receiving hundreds of inquiries a week and licensing around 60 companies a month. All of these companies have to have offices in JLT and several are looking to accomodate 100s of employees. The procedures and costs are in line with other free zones and are continuously being revised and improved. JLT by early 2010 will have plenty of shops and supermarkets that are in the process of setting up now. JLT like any other free zone does not allow companies who are not licensed to locate in it. This is to do with being able to regulate the free zone for the good of the whole area. Many towers are filling up now and this will increase in weeks to come. JLT is a fantastic location and will grow into an ideal community. DMCCA is a forward thinking body with a hands on approach. Good luck to you all.
Posted by Ranjani, Dubai, United Arab Emirates on 1 October 2009 at 12:28 UAE time
We own an office unit in TECOM Executive Heights and despite registering it for rent/sale with several real estate agencies, we have had no enquiries. SCC and James Bernard were the only ones who had something promising to say about the Free Zone Areas. Request them to please put me in touch with some prospective tenants/ buyers.
Posted by Greer, Bangkok, Thailand on 1 October 2009 at 06:31 UAE time
Omar - very well said! An excellent post.
Dubai growth has to a large extent been on the backs of artificially inflated values in many sectors, but have faith, I am certain things will improve.
In order to maintain sustainable growth into the future, there has to be a realisation that ripping off businesses, tourists, and anyone else who can be trapped and manipulated is not going to guarantee your life for next year or the one after that.
Dubai has many good honest businesses with a solid base upon which to grow, but real estate was an expanding bubble that eventually had to pop!
Posted by Andy, Taipei, Taiwan on 30 September 2009 at 22:07 UAE time
I had some apartment units in Saba Tower II in JLT and the fees that they were charging for the community were beyond crazy. This is part of the reason people just started selling. The other reason was the cost of licensing fees and permit fees (If you ever got them or were approved) were also beyond crazy. The high rents, high fees and hassles turned everyone off and sent prices tumbling in JLT. This was bound to happen due to greed in the local fees that the municipality was charging owners and renters who either lived there or wished to do business there.
In Singapore,Hong-Kong and Taiwan one does not need to pay these absurd fees. Give them time and they may learn.
Posted by nabil, Fujairah, United Arab Emirates on 30 September 2009 at 17:54 UAE time
So Omar it is not the GREED of landlords nor freezone administration!!
now you blame ("executives, investors, tenants, companies, etc..")
can anybody say who is paying money and who is collecting money because Omar confused me
Posted by Omar, Dubai on 30 September 2009 at 17:15 UAE time
Greed exceeded all limits from everybody (executives, investors, tenants, companies, etc..). Real estate prices in Dubai reached levels much higher than California. Although i LOVE Dubai and believe in this unique place in the entire MEASA region, the entire crush in the real estate market was bound to happen.
Common sense: Is Dubai comparable to California or Japan so it justifies such high prices. The answer is simply NO. All previous prices were artificial and thus, the crush - correction was BOUND to happen 100%.
Dubai MUST and hopefully will learn from the previous period as HH Sheikh Mohammed pointed out. It's absolutely great to have a vison and ambitions but the real estate prices should be logical for everybody's sake.
Having said that, prices will NOT drop to cheap prices like Cairo or Saudi or India or Iran or Pakistan bcz Dubai will Inchallah remain the HUB of the entire MEASA region. However, the previous greed MUST be wiped out from everybody's brain including the executives of the free zone.
Let us concentrate on productive industries rather than building and selling real estate like in a vegetable market!
Dubai has a huge potential to progress further ande further.
Greed will lead to nowhere.
Posted by moemen attia, dubai, UAE on 30 September 2009 at 09:40 UAE time
I must agree with most of the comments mentioned here, and I want to add that we as owners of offices have to pay high charges compared with office owners outside free zones.
We pay 3 - 3.5 DH PSF for the past 1.5 year for the community maintenance although JLT lakes are not ready and the whole area is still not ready and under construction.
We pay District cooling that averages 7500 DH a year for a 1k SQF regardless wither the office is rented (used) or not. Not based on consumption
Posted by Bob, Sharjah on 30 September 2009 at 07:05 UAE time
Another month and we are out of here. Said it before and will say it again. Singapore has made our transition from here to there an almost pleasant experience. Absolutely hassle free. Talk about fast, efficient, economical and courteous service. No such thing here in Dubai.
Posted by Kevin, UAE on 29 September 2009 at 23:27 UAE time
This will simplify the process for renting an office or a retail....JLT area is happening and pitty to see it's offices and retail empty.
To give you an example for lack of appropriate retail: for simple groceries, tenants in JLT have to cross to Marina to get it done!!!! the drive takes close to 20 mins with all the circles...
Please..someone has to look and inspect the work in DMCC and simplify the approval process, otherwise, you are loosing lots of investment.
Posted by Terry on 29 September 2009 at 21:08 UAE time
I must agree with Lynda, 100%. This is exactly what happened to us. We bought a unit for our self and a unit to rent. We could not use the office for our purpose, because DMCCA would not give permission. We tried to rent it, and still no offer, since everybody says it is just impossible to deal with DMCCA (extremely costly and restrictive) .
I must agree with Lynda. DMCCA has turned JLT into a ghost town, which investors are paying dearly.
Meanwhile, lets not forget the greedy developers, who are milking the owners dry, by charging an average of 20 AED /sqf on an empty office building with no amenities! JLT free Zone has turned into a very expensive and cruel joke.