By Shane McGinley
CITYSCAPE 2012: Companies looking to expand, especially in oil and gas sectors, says CBRE
Demand for commercial office space in Dubai is matching levels seen in 2007, a leading real estate analyst said ahead of the start of the Cityscape Global real estate exhibition.
While a report in April by real estate firm Cluttons said the total office supply in Dubai is expected to rise to 70m sq ft by the end of 2012, with vacancy levels set to exceed 40 percent, Nick Maclean, the managing director in the Middle East for rival firm CB Richard Ellis (CBRE) said this was not the whole picture.
“There are some interesting things happening… The headline numbers in terms of vacancies are not the true picture in terms of what is going on at the moment,” he claimed.
“We specialise in the commercial market. We have seen in the first seven months the same level of take up in the whole of 2011, which is as least as good as 2007. There is quite a lot of activity at the moment,” he claimed.
The majority of the demand was coming from the oil and gas and the corporate sectors, “which have had their reins released to come and look for new markets,” he observed.
“It is the not just people upgrading… We have got people effectively expanding their businesses, not just relocating. Business sentiment in Dubai is strong and there is demand… It hasn’t been this strong for some time,” he claimed.
Earlier this year, CBRE said the Dubai office market was forecast to see demand of around 4.5m sq ft over the next year, with rents expected to remain flat.
After four straight quarters of flat growth in the emirate's office market, the rental outlook for 2012 is "one of continued stability, albeit with attractive landlord incentives on offer", a CBRE report said.
It added that an estimated 25m sq ft of office space could enter the market by 2014.
According to CBRE, the highest vacancy rates are seen in Business Bay, Jumeirah Lakes Towers, Silicon Oasis and Jebel Ali areas, largely due to disadvantages in ownership, completion period, design quality, location and accessibility.
Here we go again with the flip floppers coming in for a "quick rich schemes " . The market again would blow up and explode again financially due to no regulation on this matter
Market is not back to 2007 levels.....it is just sitting there waiting to be reformed. Reports can be many, practicality is something else. We live in Dubai and travel to every place,area,business districts, Pl do not mess up. If it is back to 2007 levels u will see people leaving. Thanks but no thanks.
I dont believe this article is correct. People maybe upgrading perhaps, but no way is it close to 2007. I remember in 2007 to get an office in Noor Islamic Bank bldg on shk zayed, Rocky real estate was asking between 250k and rose to 600k. I dont believe its anywhere close now.
Whoever written this report may not have actually studied or have not seen the ground reality. It is no way close to 2007. It can bounce back only if there is serious reform happens like visa for property owners etc. I own few properties in Dubai expecting good rental income, unfortunately I earn way low than expected rent.
Irrational Exuberance at a time for austerity and paced recovery. It will take 5 to 10 years of a steady growth rate for a sustained recovery to hold. The patient has just got off the bed and started walking slowly. Dont put em back in bed !
Lest we forget, the global financial crisis officially started in 2007, firms were not pulling their financial horns in at that point, because the old adage was still going around with Dubai claiming that the emirate was insulated from the global financial crisis. This proved not to be the case, although the full effects were not really felt until the end of 2008, although they were in the highly developed economies.
If we are back at 2007 activity levels then perhaps some caution should be exercised. European companies may well expand to Dubai to offset the business malaise at home, but it ain't getting better in the eurozone which will sap their financial resources. Chinese companies the same as industrial output falls, but remember they are all looking for earnings, if that doesn't happen, what next?
Foreign banks are certainly far less keen to lend in UAE. Business will always cling to recovery, but the UAE is still as impacted by the financial situation abroad as it alway was!
This is irresponsible journalist. Try to talk up the market, despite the fact. Are you serious, back to 2007 level >?
This is not serious article.
This is totally irresponsible on Arabian Business to public
such an article.
Any one in Dubai know it is NOT TRUE.
Wishful thinking..or rather Day Dream in Dubai !
with no regulation and thousands of people still waiting for their hard earned money to be paid back? do you think people have fish memories? Every day their are out their negative news about developers misbehaviour: dubai properties taking away the beach park sold to investors, has not delivered on their contractual obligations, no audited books, no owners association, high service charges and poor services, daily black mail of owners. Nakheel latest publicity about taking the beach away, increases of fees. The rental scams all over the place (only one reported). RERA lack of action against all these guys are notorious in the world. the journalist should get in touch with the real world instead of writing things people know are untrue.
Just to add to my comment, one of the larger investor groups in Dubai property , quoted in another AB article as very active in the market, were Iranian.
As it has just been announced that the maximum amount of hard currency, i.e. USDs, that can be taken out of Iran by individuals is now $3,100 because the rial is caving in, then I imagine that source of investment, sadly will dry up pretty darned quick.
Actually, people do have goldfish like memories and history demonstrates that we never learn. Just like residential property, there are plenty of individuals who see value & reason behind real estate purchase here. It beats me and I cannot fathom why anyone would bother, given all the reasons outlined almost daily by commentators here.
However, real estate purchase is not governed by fundamentals in this region and there are hordes of people rich or daft enough to indulge. As for responsible journalism, I think you have the wrong end of the stick; this is about generating comment not investigating or righting wrongs. For the publishers, there's simply not enough news here to fill pages so we get the daily diet of house and office price swings and forecasts by the very people whose judgement one should care about least of all.