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Fri 23 Dec 2011 09:54 AM

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Dubai sees 'buoyant' office demand in Q3 - CBRE

New report says rising vacancy rates in Abu Dhabi are keeping rents under pressure

Dubai sees 'buoyant' office demand in Q3 - CBRE
Dubai office space has seen a surge in demand in Q3, says CBRE

Dubai's office occupier activity has been buoyant in the third quarter of 2011 with the market seeing a significant upturn in lease enquiries,  CB Richard Ellis said on Tuesday.

By contrast, the CBRE research showed Abu Dhabi's rising vacancy rates are keeping rents firmly under pressure.

Dubai has seen current demand increase in Q3 2011 with existing companies either looking to expand their activities, or from occupiers located in older areas of the city seeking more central areas, the real estate consultancy said.

The Dubai International Financial Centre and TECOM freezones were particularly in demand this quarter, resulting in a sharp reduction in local vacancy rates, it added.

In Abu Dhabi many occupiers are considering deferring relocation decisions until 2012, when a considerable amount of new supply will become available to the market, CBRE said.

"This is also due to the rising vacancy rate keeping rents competitive, albeit the rate of rental decline seems to have slowed recently," the report added.

CBRE also said take-up in the office market in London and Paris soared by 26 percent and 46 percent respectively in the quarter as office leasing transaction levels hit a 2011 peak.

Despite the weakening economic outlook, occupier demand across European office markets remained roughly stable compared to the same period last year.

In the Asia-Pacific region, prime rents have risen 2.2 percent in the past three months, contributing to a 12.9 percent upturn in the past year.

Earlier this year, CBRE's Business Footprints report identified Hong Kong and Singapore as the world's most popular business locations, and these two centres have been key drivers of the rental recovery across the region.

Matthew Pullen, head of Global Corporate Services, CBRE EMEA, said: "The European sovereign debt crisis has resulted in a more cautious sentiment among occupiers and it is hardly surprising that some have opted to delay major real estate decisions until the economic outlook improves.

"However, it is encouraging that against this economic backdrop we are seeing an upswing in leasing activity in London and Paris. It suggests that the flight to quality trend continues and corporates are exploiting static rents to upgrade to better space."