Property | UAE

DIFC rentals come under pressure

Dubai Office rental rates in DIFC (Dubai International Financial Centre) had so far remained mostly insulated from the declines witnessed elsewhere in Dubai.

  • By Liam Nelson, Feature writer, Property Monthly
  • Published: 00:00 August 1, 2010
  • Property

  • Rental rates in the prime DIFC estate have fallen to Dh370 per square foot from the Dh400 per square foot recorded during Q1
  • Image Credit: Kishore Kumar

However, if latest figures from CB Richard Ellis are anything to go by, the knock-on effect of the downturn is beginning to be felt at the region's premier financial free zone.

"Not all markets have returned to positive territory as yet and prime rents in Dubai witnessed a further drop during Q2. Rates in the prime DIFC estate have fallen to Dh370 per square foot over the Dh400 per square foot recorded during Q1," says Matthew Green, head of research and consultancy UAE for CBRE Middle East. DIFC rentals declined an average 7.50 per cent in Q2, which was a drop of 17.58 per cent on year, and 32.73 per cent from peak, shows CBRE's EMEA (Europe, Middle East and Africa) rents and yields report for Q2 2010. The impact of new supply and increased competition between landlords to secure tenancies has forced rental rates downward.

"However, it should be remembered that rents within the estate continue to hold a considerable premium over other locations in the market," says Green. As a financial free zone with independent regulatory and jurisprudence branches, DIFC's premium price reflects an infrastructure that is unparalleled in the market.

The story is different in some other markets across the EMEA region, shows the survey of 55 cities. The results are, however, varied across different regions, with Norwegian capital Oslo posting the highest gains: rents increased 6.67 per cent over the previous quarter.

linelson@alnisrmedia.com

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