A new report from the consulting agency Cluttons outlined the main directions of the Dubai office market further development, identifying the particular popularity of the Business Bay area.
The lack of new high-quality Class A offices, as well as free land for construction in areas such as Bur Dubai, Deira and Garhoud caused the increase of rents in these centers of business life in the emirate, which brought Business Bay to the top of the industry leaders list.
“Land values at Business Bay have come down slightly to about Dh225 to Dh350 per square foot. All of a sudden what that means is the viability of some projects that had previously stalled has now improved significantly,” said Faisal Durrani, Cluttons’ global head of research.
“Business Bay is starting to be seen as an alternative to Deira, Bur Dubai and Garhoud, which obviously have congestion issues,” said Mr Durrani. “There are occupiers who need to be in those locations for various reasons, but when you have a cheaper alternative that is in a more central location, it does present quite an attractive alternative,” he added.
The average rental price for Dubai office units now stands at Dh250 per sq ft for primary space, Dh130 per sq ft for secondary space, and Dh70 per sq ft for tertiary space. And while the rents in areas such as Garhoud was currently about Dh110 per sq ft, rents in Business Bay fell to a base price of Dh70 per sq ft.
Demand for office space in Dubai as a whole continues to outstrip supply, but there is an area, which enjoys an exceptionally high demand from tenants. It is Dubai South, and it is expected to also have a special duty-free zone, connecting it to the Jebel Ali port, upon the completion.
“Demand is still probably slightly ahead of supply in most of the industrial sub-markets across the city,” said Mr Durrani.