Dubai - Mubasher: Businesses have been recently taking advantage of lower rental costs and myriad location incentives in the emirate of Dubai, according to a research conducted by Savills Dubai office.
The current market dynamics favour occupiers as landlords offer a wide range of benefits to attract organisations and entrepreneurs, the leading real estate provider said.
Paula Walshe, director for international corporate services for Savills, commented: “Dubai is already an attractive hub for global corporations and while office market activity has softened in the first quarter of the year, the city offers an increasingly beneficial operating environment for businesses.”
“With lower rents, a range of quality developments available and landlords taking a more flexible approach to leasing, both domestic and international organisations are well-placed to take advantage of Dubai’s business-friendly rental environment,” Walshe added.
New providers who join Dubai’s serviced office sector operate “more freely” in the region under the improved legislation, the firm’s Dubai Office indicated.
Businesses have also shown a growing interest in co-working spaces in start-ups and tech entrepreneurship, “where open desk spaces offer more cost-effective solutions for fledgling companies,” Savills added.
“There is a culture for entrepreneurship in the UAE, as the economy diversifies away from oil-based industries and moves towards technology and knowledge-based start-ups as set out in the UAE Vision 2021. It is clear that such trends are affecting the Dubai office market and that landlords must keep pace with the changing business demands in order to stay profitable and ensure continued occupancy of their office spaces,” Walshe said.
Furthermore, the demand for small- and medium-sized offices has surpassed the demand for larger office spaces, as businesses tend to well run their operations, the research noted.
“To incentivise occupiers, landlords have become more flexible, with approaches such as rent-free periods, offering extended car parking facilities, shorter lease terms and even upgrading shell and core spaces to Category A fit-outs (CAT A) to secure agreements,” according to the research.
Savills expected that supply will maintain to exceed demand through 2019 with property developers and landlords carrying on their offers to tenants.
The research highlighted that good quality prime buildings is “the most stable sub-sector”, as demand for is more consistent with more stable rental values.
Dubai International Financial Centre (DIFC) has seen the highest average rents at around AED 200 per square feet per annum, with Dubai Airport Free Zone (DAFZA) and Downtown Dubai at AED 135 to 170 per square feet per annum.
Average rents at Media City and Internet City were at AED 160 per square feet per annum, while it stood at AED 140 per square feet per annum in Sheikh Zayed Road.
