By Staff writer
CBRE report says falling oil prices have so far failed to dampen demand for commercial property in emirate
Dubai's commercial property market is forecast to remain strong during the remainder of 2015 as falling oil prices have failed to dampen demand in the emirate, CBRE has said in a new report.
Despite a substantial rise in new stock, the office market has remained broadly stable during the first quarter of 2015, the global real estate consultancy firm said.
Around 0.42 million sq m of new office space entered the market during 2014, helping to control rental inflation in the second half of the year, CBRE said.
According to its report, the office sector remained steady during the quarter with the average central business district (CBD) rental rates unchanged at AED1,885 per sq m per annum while year-on-year the increase has been marginal at three percent.
Mat Green, head of Research & Consultancy UAE, CBRE Middle East, said: "Positively, Dubai hasn't experienced a slowdown in demand as a result of the declining oil price, largely due to the diverse nature of the emirate's economy and the UAE's position as the regional business hub."
The total office stock as of Q1 2015 measured 8.1 million sq m with an addition of approximately 40,000 sq m from the Dubai Design District delivered during the quarter.
According to the report, sustained growth in small and medium enterprising (SMEs) within Dubai's free zones continues, helping to improve occupancy rates and drive rental rates. Furthermore, larger space occupiers continue to seek consolidation opportunities in better quality accommodation.
Secondary rents now average AED1,170 per sq m per annum, a rise of seven percent on the year-earlier period, said CBRE.
Green added: "The commercial office market is anticipated to see continued strong demand across major freezone locations. However, the current global economic situation could lead to an elongation of negotiation and deal periods, as head offices in Europe and the US take longer to sanction moves amidst on-going uncertainty, low oil prices and rising regional unrest."