Challenges ahead for office market

There are still challenges ahead with significant volumes of office supply in the UAE market and quality will continue to be focus point for new office lookers that will maintain rents of prime properties in the UAE, CB Richard Ellis’ (CBRE) MarketView on office. There are a lot of positives to take from the last year with solid economic and population growth in Dubai reflecting an improving business environment, according to CBRE Middle East head of Research and Consultancy Mat Green. “We anticipate that the flight to quality will continue and that will maintain rents for prime properties in the most attractive locations, but on the flipside will see secondary products suffer amidst rising vacancy rates and strong competition to secure tenancies,” Green said. Dubai commercial business district (CBD) prime lease rates remained unchanged during the past year but hightened competition is prompting landlords to adopt more aggressive leasing strategies and offer longer rent free periods to lure tenants, according to the report. “Market conditions outside of the CBD will remain challenging next year, when a large amount of new space is due for completion. The bulk of deliveries will be concentrated in secondary and tertiary locations such as Business Bay, DIP and Jumeirah Lakes Towers,” the report said. In Abu Dhabi, most occupiers are choosing to delay moves to later in 2012, waiting for the new budget allocations to be finalised and for new high-quality stock to be delivered onto the market. In turn, the expected increase in supply levels will challenge landlords to maintain high occupancy rates and offer more competitive rent levels.