Office rents in Dubai and Abu Dhabi have remained the highest across the world in 2009 despite the regional property market witnessing a slowdown, according to two reports.
Rents in the capital and Dubai stood at €569 (Dh2,860, $779) per square meter in 2009, according to Knight Frank, while DTZ said Dubai still remains the most expensive location in the Middle East and Africa (MEA) for office space with occupancy costs at $14,520 per workstation.
Abu Dhabi's occupancy costs stood at $14,300 per workstation, followed by Doha were costs were at $12,520 per workstation.
Andrew Goodwin, Director, DTZ UAE, told that they expect a near doubling of good quality office space in Dubai over the period to 2012 with an increase of over four million square meters in line for completion. However, some of these schemes may be delayed, he added.
"Abu Dhabi has a much smaller existing quantity of modern office accommodation, while there is projected to be only 400,000 square meters of office space completed in the capital over the same period. A lot of this will be taken up by offices migrating from poorer quality office stock."
Asked if Dubai will still continue to remain the most expensive location for office space in the region, Goodwin said: "There has been a fall in rents of 34 per cent over 2009 and with vacancy rates expected to rise in Dubai, there will be further downward pressure in rents. We do think prime areas within Dubai will retain their value leading to a higher differential between prime and secondary locations."
James Lewis, Director of Investments at Knight Frank, said: "Abu Dhabi will continue to hold its position while Dubai is likely to decline. Yields will, however, soften across the board."
However, Abu Dhabi will begin to see the completion of offices off the main island and will start to open the commercial office investment market to international and GCC investors for the first time, Goodwin added.
DTZ expects occupancy cost in the Middle East to either "stabilise" or "decline". Occupancy costs are expected to continue to fall in Doha, Kuwait City and Bahrain, as significant levels of new supply come on line at a time when occupiers are consolidating their business activities and thus adding secondary space to the market.
The global adviser expects growth in occupancy costs to be relatively muted over the 2010-2013 forecast period, in contrast to the strong growth in occupancy costs experienced in recent years. This reflects the global economic outlook, which is impacting on firms' hiring decisions and consequent demand for office space, resulting in weak rental growth in the near term.
Emirates Business
