Office rents steady in some Dubai areas

After heading south for the first half of the year, office rents in some areas of Dubai have held steady for the past month, pointing to a possible stabilisation in the second half of the year.

According to the latest data supplied to Emirates Business by real estate agency Better Homes, office rents in many areas in the city are showing signs of stabilisation. "It is difficult to say what will happen in the second half [of the year] but a lot depends on demand and supply," said Porush Jhunjhunwala, Manager, Commercial Leasing, Better Homes.

"We don't foresee any drop in rents on Sheikh Zayed Road in the coming months but December will be crucial as there will be a lot of supply on the Metro line. Many buildings in Business Bay are ready but cannot be rented out due to infrastructure problems. But once the infrastructure is ready, we will see a lot of supply in the market along Sheikh Zayed Road, which may bring down prices," he said.

"Dubai Silicon Oasis has more or less stabilised and we see no further room for correction. Bur Dubai has stabilised, too, as there is not much availability. We do not expect any major correction in Karama as well, since there is no new construction for the time being. However, if the rents do drop further, we don't expect it to be by anything more than five per cent.

"In the Tecom area, Dubai Economic Department buildings may see a 10-15 per cent correction but we do not expect any drop in rents in the main Tecom buildings. However, landlords will continue giving additional inducement there."

Rents in Dubai Healthcare City have also stabilised. "It's a very niché market. Buildings in Healthcare City only rent out to firms that are in, or associated with, the healthcare sector," said Jhunjhunwala.

"As far as Garhoud is concerned, there may be a 5-10 per cent drop. We have not seen people leasing out fast in this area due to parking problems." He said Jumeirah Lake Towers is not far from bottoming out but there may be a dip in maximum rental prices due to oversupply.

"Al Fajer properties have five buildings in the area for handover before the end of this year. Together, they contribute more than two million square feet of space to the market. There are many other towers in JLT that have been handed over in the past 12 months, but are almost 70 per cent vacant. These include Indigo Icon, HDS, One Lake Plaza, Tiffany Tower, Fortune Towers, and the mixed-use Dubai Arch," he said.

Dubai Investment Park may see a 10 per cent drop, whereas Dubai International Airport may see a five per cent decline in rents, he said.

"We also see a 5-10 per cent decline in rents in the Downtown Burj Dubai area, because it needs to compete with the lower rents on Sheikh Zayed Road," he said.

Areas that have not seen a dip in rents when compared to the beginning of August include Bur Dubai (Dh90-115 sq/ft), Deira (Dh75-110 sq/ft), Healthcare City (Dh115-145), DSO (Dh50-70), Garhoud (Dh80-110), JLT (Dh55-120) and Tecom (Dh130-175).

Keep up with the latest business news from the region with the daily Emirates Business 24|7 newsletter. To subscribe to the newsletter, please click here.

Follow Emirates 24|7 on Google News.