By Elizabeth Broomhall
Iconic skyscraper has sold just 50% of units in emirate's glutted commercial market
Dubai’s latest eye-catching real estate project, the curved i-Rise officer tower, has sold just half of its units as it prepares for handover this month, the developer said.
The ‘S’-shaped tower is set to launch in a glutted commercial market, resulting in “very little sales” since 2009, developer Realty Capital told Arabian Business.
The company said it is proud to have delivered the 36-storey skyscraper in a market where more than half of real estate projects were suspended or cancelled in the wake of the financial crisis.
“We have sold a dream and have delivered our promise,” said CEO Marwan Mansour.
The global financial crisis burst Dubai’s property bubble in late 2008, sending speculators fleeing from the market and wiping more than 60 percent off the emirate’s house prices.
The i-Rise tower, which offers 31,000 sq ft of commercial space per floor, will come onto a stagnant market where about 40 percent of offices and homes stand empty.
Though Dubai’s residential real estate market dominates the headlines, analysts argue that the emirate’s commercial sector is potentially in worse shape.
Around 12 million sq ft of commercial space is slated for completion in Dubai this year, according to Jones Lang LaSalle. Office vacancy rates stood at 41 percent in the fourth quarter and may exceed 45 percent over 2011, the property broker said in its real estate outlook for 2011.
Rents in the sector still have further to fall as a glut of supply squeezes prices further, the CEO of real estate consultancy colliers said Monday.
“Valuations are still falling at a rate faster than one would expect,” John Davis told delegates at the 4th Arabian Business Forum.
Colliers estimates that three million sq m of commercial space will come online this year, allowing for the high number of delayed and suspended real estate projects.
“That’s the equivalent of 75 empty towers along Sheikh Zayed Road,” Davis said.
Many owners are turning to perks such as rent-free periods and free utilities in a bid to attract tenants, CB Richard Ellis said in a report last month.
“With increasing competition in the market some landlords are now offering all-inclusive deals covering rent and service charges, whilst some even cover chiller costs and DEWA charges,” analysts said.