By Alex Delmar Morgan
EXCLUSIVE: Arabian Business research reveals 11% increase in just four months.
Huge demand for high quality office space from companies has pushed rents up by more than 11 per cent in downtown Dubai in the four months to September, research by Arabian Business has shown.
The cost of renting offices in one of the emirate’s most expensive business districts, Burj Dubai, has seen an increase from 495 dirhams ($134) per sq ft in May to 550 dirhams ($150) per sq ft last month, according to figures provided by real estate agent Better Homes.
Rents in other financial zones popular with firms, such as Tecom and Jumeirah Lake Towers, have climbed 8 percent and 11 percent in the same period.
“As long as supply is limited, office rents will continue to rise. The need for space in Dubai and the need for doing business is huge,” said Niraj Masand, director of commercial property at Better Homes.
Real estate broker Colliers International claim that office rents rose 37 percent between the final quarter of 2007 and the second quarter of 2008.
Capital values increased 27 percent in the same period, said the property firm in its recently published MENA Real Estate Overview.
A supply shortage of grade A office space in Dubai coupled with massive demand from international banks and law firms looking to beef up their presence in the Gulf has created a buoyant commercial property market.
Large amounts of office space are set to come onto the market after 2010, but Dubai’s population boom will trigger continued demand.
A lack of supply is also being exacerbated by completion delays, a common problem in Dubai.
Colliers estimates that only 435,000 sq m of offices will be built in Business Bay by 2010, versus a projected 1.9 sq m.
Vacancy rates in the city are currently running at 2 percent.
Rents in Tecom rose from 263 dirhams per sq ft to 284 dirhams per sq ft in the four months to September, the research by Better Homes said.
At Jumeirah Lake Towers rents lifted from 229 dirhams per sq ft to 255 dirhams per sq ft in the same period.