Business | Property
Vacancy rate for office space in Dubai falls to 1%
Spiralling costs for commercial space in Dubai are directly linked to a vacancy rate of just one per cent, according to an industry expert.
- By Robert Ditcham, Staff Reporter
- Published: 00:00 September 17, 2006
- Vacancy rates are generally seen as the key to stability in commercial space rates.
- A rate of 5-10 per cent is considered appropriate for a stable market.
- A vacancy rate over 10 per cent is considered an over-supply of available space.
Dubai: Spiralling costs for commercial space in Dubai are directly linked to a vacancy rate of just one per cent, according to an industry expert.
With such a small fraction of commercial space available, landlords are increasing their prices and putting substantial pressure on companies investing in Dubai, said Jon Steiner, executive director of CitySpace, a company specialising in corporate workplace solutions.
Steiner is representing the Middle East market at the CoreNetGlobal Summit in Portugal today, which will focus on workplace strategies in fast-growing markets.
He will highlight Dubai's mounting commercial rates, which he claimed have risen 50 to 100 per cent in the last three years, leading to average prices of approximately Dh250-Dh300 per square foot.
"Rates of Dh250 per square foot were extremely unusual five years ago when the average price was Dh100-Dh150 per square foot for most of the buildings on Shaikh Zayed Road," he said. "It is putting pressure on companies to increase their floor space density by cutting the amount of space available to each person.
Steiner said companies are closely examining their long-term ability to finance the space they decide to lease, especially smaller firms with more unpredictable growth rates, while others are putting off investments until the market stabilises.
"Companies are studying their business plans very carefully before deciding on the amount of space they take," he said.
Dubai's emergence as a global financial hub is behind the strong demand for commercial space, according to Alastair Hughes of global real estate services and money management firm Jones Lang LaSalle (JLL).
He said the announcement of freehold ownership of commercial space as well as the increasing transparency and sophistication of Dubai's market encouraged JLL to acquire Dubai-based real estate investment and advisory firm RSP Group.
According to Steiner, the future holds some hope for companies struggling to cope with mounting overheads. "A lot of space is coming on stream in the next two years," he said.
INSIGHT
The key to stability
Business Editor's choice
-
DFSA chief to step down in September
Executive has been at post since 2008
-
Geepas idea blossomed in Dubai
The journey led from a small shop in Bahrain to a $1.27b company in the UAE
