Dubai: Office space in Dubai often fails to meet the requirements of global corporations desperate to locate in the emirate, according to real estate services firm CB Richard Ellis (CBRE).

Simon Townsend, director of the company's Middle East branch, said Dubai's commercial buildings are impressively designed on the outside, but often lack the interior functionality that potential tenants require.

"For corporations, the perfect floor plate is a big rectangle with a small central core and very few columns, so they can plan the space perfectly," he told delegates during a seminar at Cityscape.

"The shape of the future supply of office space is going to make it very difficult for tenants to get a nice big open floor plate."

Townsend advised developers to design office blocks "from the inside out" rather than focus on exterior design.

"Developers use the word iconic, but very few like the words functional and practical. That's a difference that must come in this market," he said.

"One of the concerns that we have is that there are incredible designed and shaped buildings, but they don't necessarily function from the inside."

Although Dubai's office vacancy rates are estimated by Colliers International at just 1-3 per cent, Townsend said substantial pent up demand for commercial space has yet to find a home.

He said many office blocks in Dubai are sold on a floor by floor basis, a commitment that global firms are often unable to make.

Clarification of the office building management and service charges is also cited by analysts as an area which needs attention.

They say corporations are desperate to locate in Dubai, but are unsure about who pays what towards a building, how much they pay, how it is audited and what happens in the event of default.

According to CBRE estimates, global corporations' demand for Dubai office space in 2006 was around 160,000 square metres, most of which remained unsatisfied due to either market conditions or product related issues.

"Tenants need security in their occupation and investors need security of their cash flow," said Townsend.

Despite these issues, the future for Dubai's commercial sector is looking rosy.

Recent market trends in the U.S and Europe have made emerging markets such as Dubai attractive investment alternatives.

"The commercial sector will be very buoyant year next year with new money coming in - not just the circulation of existing money," said Townsend.

"We know a lot of the corporations are looking at Dubai and investing heavily, not just in the real estate but in people. They are re-locating some very expensive people from around the world and making Dubai a career posting. That will have a big impact on the office sector."