DIFC office rent rises among the fastest in the world
Rents in Dubai International Financial Centre are rising at the fourth-fastest rate in the world.
According to property broker JLL, rents for offices in DIFC rose by a fifth in the year to the end of June as tenants struggled to find space in Dubai’s most prestigious office location.
“Underlying market fundamentals are sound, and corporate demand remains strong, notably in Dubai as office vacancy rates continue to decline in the DIFC,” said Jeremy Kelly, a director in global research programmes for JLL. “As a result, we have witnessed a boost in rental values in the DIFC, unlike other locations, where rental values have remained largely unchanged.”
DIFC was the office complex with the fastest growing office rents in the whole of the Middle East and North Africa region, JLL said yesterday, with rents on average rocketing 20 per cent over the year to stand at Dh1,922 per square metre.
It was followed by Cairo’s most prime office locations, which recorded annual rent increases of 16.7 per cent, driven by relocations to higher-quality spaces in more convenient locations.
Overall, JLL said that rents of prime offices across the Mena region rose 11.3 per cent over the year to the end of June, compared with growth of 11.9 per cent in the year to the end of March.
However, the agent said that the increase in prime office rents did not reflect the whole of the Mena market, where office workers often have to sit in substandard buildings surrounded by trailing wires or insect infestations.
According to JLL, office rents elsewhere in Dubai remained largely flat as the city continues to suffer from a glut of supply built before the 2008 boom, which left thousands of square feet of office space empty, and often in the hands of hundreds of different owners.
“In Dubai, rental growth is predicted to move into further positive territory during the second half of the year, and low vacancy rates coupled with little interest in occupying alternative space will continue to prevent substantial fall in rents,” said Mr Kelly.
CBRE reported earlier this summer that low vacancy rates in DIFC and Tecom were encouraging property developers to build more offices in prime areas despite the city’s high vacancy rate.
“Tecom and DIFC, in terms of their directly managed portfolios, are pretty much full,” said Matthew Green, the head of research and consulting at CBRE Middle East. “There are only small pockets of space available.”
Follow The National’s Business section on Twitter