The past year has witnessed the introduction of a number of landmark laws that have further cemented the UAE’s reputation as a highly attractive market to conduct business and an extremely desirable place to live.
Such legislation includes 100 per cent foreign ownership and dual licensing, which are expected to have a positive impact on the commercial property market; five-year retirement visas for those who own property worth at least Dh2 million; and 10-year visas for investors, entrepreneurs and specialists working in medicine, science and research, which we envisage will encourage additional activity in the residential markets.
It will, of course, be some time before we can begin to see the full effects of such legislation. However, positive effects are already being felt, particularly in the commercial property sector. Dubai, in particular, continues to witness strong demand for premium office space, especially within the specialist sub-markets like Dubai International Financial Centre (DIFC). Anticipated office supply currently stands at 263,000 sq m of additional gross leasable area (GLA) as of the third quarter, while 940,000 sq m of GLA is expected to be delivered by 2020.
Prime office rental rates in the emirate stand at Dh1,770 per square metre per year, and although this is a slight drop on 2017 figures, there is an increasing trend towards the signing of longer leases (5-10 years), demonstrating a commitment to the Dubai market and the importance placed on securing and retaining premium office space. There are a number of up-and-coming areas where we can expect to see an increase in future supply in the coming years. Jumeriah Lakes Towers comes out top with 26 per cent, while Tecom (12 per cent), Trade Centre (11 per cent), DIFC (10 per cent) and Dubai South (10 per cent) provide key alternative prime locations.
Other key trends for 2019 include the continuing consolidation of office space as companies continue to look to reduce costs and negotiate lower rents and a continued movement towards open-plan and flexible offices, with emphasis on wellness in the workplace through tailored ergonomics.
As more properties enter the market, we can expect a spike in innovation and incentives by developers to further increase occupancy levels and tenant retention rates.
Dima Isshak is manager of strategic advisory at CBRE Middle East. The views expressed here are her own.