i Office Rentals to Stay Sluggish Until 2010, Says CBRE

DUBAI — Office space rentals in Dubai have plunged by 63 per cent in the last nine months, but prices are likely to fall further for the remainder of 2009 and 2010 as a dearth in demand, along with abundance of new supply, will keep the emirate’s office space leasing market sluggish, especially in the freezone areas, said property consulting company CB Richard  Ellis Middle East. CBRE said the biggest drop in rents has been felt the most in the new freezone areas of Jumeriah Lakes Towers and  Dubai Silicon Oasis.

By Rocel Felix

Published: Tue 29 Sep 2009, 11:05 PM

Last updated: Sun 5 Apr 2015, 10:05 PM

Average rents at the JLT area have gone down to Dh70-120 per square feet from Dh240-Dh280 in the third quarter of 2008.

Office space from private developers in Dubai Silicon Oasis is now averaging Dh50 per sqft. and at Dh85-Dh130 in Dubai Internt City, Media City, Jebel Ali Freezone and Airport Freezone. No comparative figures  were provided. The global economic slump has badly-beaten Dubai’s property market, as property prices were halved from their peak prices in September 2008, hitting both the residential and office space segments. The largely-expatriate population of Dubai that fuelled the five-year property boom dwindled this year, with thousands losing their jobs and sent back home to their countries as companies scale down operations. “The drop in sales rates has seen individual owners extending holding periods and frequently opting to lease their properties rather than looking to sell,” said Mohammed Faheem, research analyst at CBRE Middle East. The office space leasing market will have to brace for even tougher times as existing stock will face competition from new supply coming on stream.   Office space available in the third quarter this year has more than doubled to 5.2 million square feet from 2.5 million during the third quarter of 2008, said Faheem.

“During the remainder of the year and into 2010, we expect the leasing market in these areas to remain sluggish, largely due to additional pipeline stock expected to enter from freezone developments as well as non-freezone areas such as Business Bay development.”  — rocel@khaleejtimes.com