Shifting scene for office realty
Dubai's commercial sector has seen a strong start this year with the number of leasing transactions up significantly in both annual and quarterly terms in the first three months of 2014.
However, the value of transactions was down markedly on the previous quarter, according to the latest update report from international real estate consultants Knight Frank. The report highlights that these results are not surprising, given that high value leasing contracts were signed by corporates before the end of last year and that owners of strata commercial space have increasingly been expressing an interest in purchasing accommodation in freehold locations.
Knight Frank expects that quality offices in prime locations will see rents rise 20% this year and 10% in 2014. It also points out the recent completion of projects along Sheikh Zayed Road, Business Bay and Al Barsha - highlighting that the increased level of office supply in these areas provides greater tenant choice and helps stabilise rents.
This growth in the sector is significant at a time when experts have stressed the need for UAE to be concerned about property flipping. "Speculation in the market will always be there and it cannot be eliminated," said Gurjit Singh, chief development office, Aldar Properties. For major developers, the key is in implementing new measures to prevent the practice whenever possible. Emaar Properties does not allow investors to sell properties in the secondary market until they have paid 40% o the purchase price. According to Chairman Mohamed Alabbar, "We are trying to control flipping. We have a mainframe system that is incredible - if you buy and you flip within 30 days, the system will never allow you to come and buy with us again."
Market Insight is aimed at examining the emirate's dynamic market and forecasting industry trends. There are clearly significant changes occurring in Dubai's real estate sector - whether it be in the area of residential or commercial property. One thing is certain, developers across the country are taking news reports seriously and are working hard to ensure that they avoid the mistakes of the 2008 recession. To follow up on the newest trends to hit the market, be sure to read through our latest observations in our weekly publication.