By Shane McGinley
Real estate consultancy chief warns of 'long term unsustainable' levels.
Dubai is forecast to see another 20-30 million square foot of office space being added to the already cluttered market in the emirate, according to the head of a Dubai-based real estate consultancy.
“The problem is that the delivery schedule by 2012 I think there is another 20 to 30 million square feet of offices coming into the market,” said Nick MacLean, managing director of CB Richard Ellis said on Monday at the Second Arabian Business Conference in Dubai.
“We have a problem and the government is aware of this problem it has passed primary legislation recently but more needs to be done, otherwise we are going to have a long term unsustainable amount of vacancies,” he added.
His comments come following a report published by Jones Lang Lasalle which estimated that office vacancy rates in Dubai are expected to exceed 50 percent over the next year as new supply continues to be released.
The study said city-wide vacancy rates have increased to around 38 percent with levels set to rise further.
However, in the CBD area (between World Trade Centre and Downtown Burj Khalifa), vacancy rates were significantly lower with just 12 percent of the single ownership stock currently empty.
JLL said that total office stock as at the end of the second quarter of this year was approximately 48 million square foot.
More than two million square foot of office space was completion during Q2, the report said, adding that there was another fifteen million square foot currently scheduled to complete during the remainder of 2010.
However, JLL added: "Further delays in construction and handover are expected to result in much of this space not being available for occupation this year."
The report said city-wide rents decreased by two percent to around AED135 per sq ft over the second quarter of 2010 and by 38 percent compared to the same period last year.
Average rents in the CBD area decreased by eight percent to around AED200 per sq ft during the second quarter, JLL added.For all the latest UAE news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.