By Andy Sambidge
Rents in Dubai financial hub see largest drop in Q2 of cities surveyed by CB Richard Ellis.
The recovery of office rents in Dubai International Financial Centre (DIFC) is still lagging behind most of Europe, the Middle East and Africa, new figures from CB Richard Ellis have showed.
While most cities saw flat or marginal gains in rental values in the second quarter of 2010, DIFC experienced the largest drops of more than 50 cities surveyed in the EMEA region.
CB Richard Ellis said the DIFC rents fell on average by 7.5 percent in Q2 while the average for all cities covered in the survey was a 0.5 percent increase.
Only Lyon in France saw declines of anything like Dubai's financial hub with a rent drop of 6.50 percent.
Year-on-year comparisons revealed DIFC's rental declines were only beaten by Ireland.
While rents in DIFC have dropped by just below 18 percent, Ireland's fell by nearly 22.5 percent since Q2 in 2009.
However, Ireland's rates have seemingly bottomed out in Q2 with rates showing no change on the previous quarter.
The cities surveyed showed on average a 0.8 percent fall in rents compared to the same period last year.
The CB Richard Ellis report also showed that DIFC rents were 34.3 percent lower than peak levels in 2008.
Last month, Jones Lang Lasalle said Office vacancy rates in Dubai were expected to exceed 50 percent over the next year as new supply continues to be released.
The study said city-wide vacancy rates have increased to around 38 percent with levels set to rise further.
Also last month, CB Richard Ellis said Dubai was set to see another 20-30 million square foot of office space being added to the already cluttered market in the emirate.