By Staff writer
Cluttons sees upturn in Iranian companies looking for more office space and approaching banks to fund growth
Dubai-based Iranian businesses are already looking for more office space in anticipation of the lifting of sanctions against Iran, real estate consultancy Cluttons has revealed.
Its latest UAE property report indicates that the lifting of trade sanctions on Iran could boost the UAE's economic activity with Iranian businesses in the emirate also approaching banks for loans to fund expansion plans.
It said that prior to the introduction of the sanctions, Iran was the UAE's biggest trading partner, while in the past both local and global businesses hubbed any Iranian operations out of Dubai.
Steve Morgan, chief executive, Cluttons Middle East, said: "We have already noted an upturn in speculative requirements from Dubai-based Iranian businesses looking to expand their premises in anticipation of a resumption in normal trade with Iran.
"Furthermore, we have also already noted several instances of Iranian businesses in the emirate approaching banks for loans to fund planned expansion."
In addition, Cluttons said it anticipates an upturn in international businesses looking to service any Iranian operations out of Dubai, which will once again place upward pressure on Grade A rents in sought after submarkets, particularly the city's primary free zones such as the DIFC, the Internet and Media Cities, D3 and Dubai Airport Free Zone.
During the first six month of 2015, headline office space for primary, secondary and tertiary space was unchanged at AED250 per sq ft, AED130 per sq ft and AED70 per sq ft, respectively.
Cluttons said this does however mask a more complex picture at a submarket level across the city.
Cluttons latest research also shows that in Abu Dhabi the office market's recent stagnation is in large part linked to the slowdown in public spending, which has translated into a drop in demand for new office space.
Faisal Durrani, head of research at Cluttons, said: "Due to a general lack of supply, particularly at the Grade A end of the market, rents have held steady and are expected to remain stable over the course of 2015, with occupancy levels close to 100 percent.
"Abu Dhabi's dependence on hydrocarbon revenues has meant that the rate of office take up, which is traditionally dominated by oil and gas companies has cooled significantly. This is likely to put increased downward pressure on more secondary and tertiary locations in the first instance, with prime rents likely to face headwinds at the beginning of 2016."
For Sharjah, office rents in the main submarkets held steady during the second quarter, following no change in Q1, Cluttons said.