Dubai: Prospective tenants looking out for a suitable office location in Dubai had better make their decisions fast. Rentals are starting to firm across all key commercial locations in the emirate, further reinforcing its position as having the costliest office realty in the Middle East, according to a new survey.
Moreover, the current rentals and associated costs also position Dubai’s offices as being the 23rd most expensive in findings by CBRE, the specialist consultancy. The occupancy cost for a Grade A office in Dubai is now estimated at $92.56 a square foot, while London’s West End was the most expensive in the world with $259.36 a square foot.
Incidentally, Dubai is the only Middle East city to figure in the Top 50 office locations with the highest occupancy costs. “Dubai remains the destination of choice for global investors looking to enter the region,” said Nick Maclean, regional managing director at CBRE.
Hong Kong’s Central district recorded occupancy costs of $234.3 a square foot and the Finance Street in Beijing was in third at $197.5. The Chinese city’s Central Business District came in fourth at $189.67.
The major US cities figured down the rankings, with New York only managing the 11th spot at $120.65 a square foot. (But CBRE reckons that office costs in the US are showing signs of building up momentum as the economy records an improved set of data. In fact, the fastest rental increases are now in the Americas.)
By the looks of it, Dubai’s office realty is now firmly harnessed to the upward climb other classes of property assets have been recording. Residential values have already gone through the process, while retail property was the first to break out of the earlier downturn in late 2010. Hospitality projects too have been propelled by higher yields and investor appetite for them.
“Confidence has returned to Dubai’s marketplace and Expo 2020 has definitely been another harbinger of good news,” said Robin Teh, country head at Chesterton International. “Real estate in Dubai has grown at an exponential pace in 2013… however, it has not yet reached 2008 levels yet, but we are seeing a glimpse of 2007 levels in most places.”
New office launches are proving a magnet for investors, and even for those who until now were exclusively looking at building up assets in residential.
Sales at the Centurion Star Tower, a freehold office property in Deira, sold more than 70 per cent of its units on the first day of sales. And these were units on the higher end of the pricing spectrum, at Dh1,700 a square foot.
“We received tremendous response from investors in Dubai and overseas and many were from the SME [small and medium enterprises] sector,” said Hamzah Abu Zannad, director of operations at Royal Star International, the developer.
