By Andy Sambidge
Although rates fall 27%, report says office rents hold up compared to other major cities.
Office rents in the Dubai International Financial Centre (DIFC) are now the second highest across the Europe, Middle East and African region after being less impacted by the global real estate slump, a new report has revealed.
Latest research from CB Richard Ellis (CBRE) shows that prime office rents in DIFC in the final quarter of 2009 averages €819 per sq m per annum ($1,121), second only to London’s West End (€972).
The other cities that make up the top 5 are Paris (€720), Moscow at €594, with Geneva and Zurich jointly fifth at €573.
Relative to the rest of its EMEA neighbours, the 12 month loss for DIFC has been "somewhat less drastic", the report said.
Moscow has lost 43.3 percent of its value, followed closely by Dublin on 39.6 percent and St Petersburg on 38.5 percent.
DIFC lost 27.3 percent of its value, while London West End fared even better, losing just 17.9 percent of its value.
Matthew Green, head of research UAE, CB Richard Ellis Middle East, said: “Rents within the DIFC Freezone have seen a level of protection during the downturn, however we are now starting to see some movement in negotiation levels within both DIFCA and privately managed buildings.
"The local market environment will continue to face new challenges during 2010 and this is sure to create additional cost implications for occupiers, especially those in prime locations such as the DIFC.
"It will thus be the responsibility of the DIFCA and the estate management to effectively mitigate and govern the situation by acknowledging and responding to market pressures, in order to maintain focus, retain current tenants and to continue to attract new global brands in the future."
CB Richard Ellis also said that Q4 2009 witnessed an increase in occupier interest and activity as office market conditions in Dubai moved further in the tenants’ favour.
DIFC has it's present clients over a barrel due to the ability to operate out of a financial free zone. DIFC knows this and has only paid lip service to lowering rents. If there were no such thing as a "free zone" and financial companies could be 100% foreign owned and operate where they liked in Dubai or UAE - there would be a mass exodous from DIFC - so lets not compare with the likes of London which is a true free market economy.
There was a similar article on this website about a year ago comparing London rents to Dubai. The only catch was that a square foot of london rent was compared to a square meter of Dubai rent. ( 1 SQM= 10.76 SQ Ft.)!!!!