Rising demand for office space drives up rents

15.12.2014
The report shows that the most expensive offices remain at the DIFC, Downtown Dubai and on Sheikh Zayed Road. A shortage of prime office space in Dubai, which is being underpinned by robust demand, has translated into strong upward pressure on rents across the city, and a rapidly diminishing supply of Grade A space in more centrally located submarkets and freezones, according to the latest research from international real estate consultancy, Cluttons.
Cluttons' Dubai Winter 2014 Commercial Market Outlook report, shows that during the third quarter of 2014, rents for prime office space reached AED250 psf, which represents a near 14% rise on Q1 and a 25% increase on the same time last year. In the secondary market, strong business activity is fuelling the demand for high quality space, with rents rising by 44% over the past 12 months to reach an average of AED130 psf.
According to Steve Morgan, Chief Executive of Cluttons, Middle East: "Following the usual summer slowdown, the market has regained its strength, with strong demand persisting for well-located space. Across the business sectors, the office market remains very active in all segments. We have been recording a steady rise in take up by both existing and new occupiers, with the banking and financial services, real estate and aviation sectors being amongst the most notable."
The report shows that the most expensive offices remain at the DIFC, Downtown Dubai and on Sheikh Zayed Road, where Grade A space lets for between AED 220 psf and AED 280 psf. There are however exceptions to this range, with space at Emirates Towers for example letting for AED 300 psf, cementing its position as the city's super prime scheme. Together, these three areas form the city's core business district, where supply is still limited.

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