By Andy Sambidge
CB Richard Ellis says UAE is once again becoming affordable option for companies with Mideast HQ
The UAE is becoming an affordable and attractive option for companies as office rents continue to fall and better deals are on the table, real estate consultants CB Richard Ellis has said.
In Dubai especially, the decline in rents has triggered more transactions both in the size and number of deals, according to Mat Green, head of Research & Consultancy UAE for CBRE Middle East.
Elongated terms of between 5-10 years are now becoming more prevalent as both landlords and tenants seek to reduce their risk exposure, Green said.
With rental rates now becoming so much more attractive, CB Richard Ellis is seeing an increasing number of occupiers looking to relocate back to the central business district.
"Demand is being led by the financial and professional services sector and continues to focus on single landlord-owned buildings," he said in a statement.
He added that the publication of a new rent matrix in DIFC allowed for "greater transparency in doing business there".
Green said: "Continued uncertainties elsewhere in the region only serve to further underline the level of stability that has been achieved in the Emirates, which, along with the quality of completed infrastructure, make it a major contender for any international corporate looking to set up headquarter operations in this region."
In Abu Dhabi, CB Richard Ellis said the wait for the first batch of internationally recognisable Grade A office buildings will finally be over in 2011.
"Occupiers have been stalling on decision-making due to uncertainties in the international economy and local business development, as well as a lack of suitable offices to move to. We are already seeing significant interest from occupiers of all sizes seeking to secure some of the new Grade A office buildings available in 2011," Green added.
Last month, Jones Lang Lasalle said that rents and sale prices for Abu Dhabi property will continue to fall across the board during 2011 due to heavy oversupply.
It said the arrival of Grade A offices this year was likely to increase office vacancy rates, which currently stand at 8.4 percent.
I assume that Abu Dhabi will eventually pull more companies because that is where the money, employment and projects are. Presumably, the increased number of transactions in Dubai is because of the sheer joy of oversupply from a tenants perspective continues to compress rents and they just keep getting better value for money. The only spanner in the works is it is now cheaper to keep a current pepper corn rented office than become involved in a fit out of new premises. Recovery is not really advancing at speed it will take years, so splashing money is not an option.
Any new companies coming in, especially of the financial services variety would take up the single landlord building, however, where does that leave huge central business districts like Business Bay and other areas with a predominance of mixed title. Film locations perhaps with the tumbleweed blowing through an empty Piazza?