By Andy Sambidge
New report says additional 10 million sq ft of office space set to enter market this year
The total office supply in Dubai is expected to rise to 70 million sq ft by the end of 2012, with vacancy levels exceeding 40 percent, real estate firm Cluttons said on Sunday.
It said despite the forecast increase of 10 million sq ft this year, office rents in prime locations in the emirate were beginning to stabilise, due to stronger demand.
Clutton's Q1 market report said DIFC, Emaar Square and the Sheikh Zayed corridor remain the most expensive locations, with JLT, Barsha and Tecom offering the lowest rates.
"Despite the excess of supply, there still remains a relatively short supply of good quality buildings for corporate occupiers with major requirements," the Cluttons report said.
It added that Cluttons was noticing a "greater appreciation of green or sustainable initiatives from occupiers" and that the market was seeing evidence of this becoming a regular requirement in the search process.
Cluttons also said that it was seeing initiatives being put in place to restart work on previously stalled projects.
"There remains however an increased recognition by government agencies to reduce the future supply pipeline," the report added.
Cluttons said the retail market within Dubai had experienced a supply slowdown during 2011, but the recently announced extension of Dubai Mall and the planned Mall of Arabia signalled a resurgence in 2012.
On the hospitality sector in Dubai, Cluttons said hotels's performance would remain resiliant during 2012 as the emirate is seen as a safe haven amid troubles elsewhere in the Middle East.
"There is now an emphasis on mid-market hotels, not just luxury ones, and several hotels are considering the feasibility of refurbishment, or in the case of the Metropolitan Hotel, complete redevelopment," the report noted.