Rise in requests to convert offices into mixed-use projects

The number of developers in Dubai seeking to convert their commercial projects into mixed-use/residential projects has increased in the recent past, industry sources told Emirates Business.

Mohamed Al Bahri, Director, Zoning Authority Development Control, Dubai Technology and Media Free Zone Authority, said: "There is a big move to convert commercial towers to residential ones and we have got a number of requests from developers for master developments under our jurisdiction.

This newspaper had reported two months back that developers in Dubai were seeking to convert their commercial developments into mixed-used projects. "We are looking at the option of converting one of our commercial projects into mixed-use one. But it all depends on the project's feasibility and investors' readiness," said Omniyat Properties Executive Chairman Mehdi Amjad.

Meanwhile, Al Bahri said: "The applications are not necessarily for projects that haven't been launched but even for ones that have just started construction." He added that residential towers needed 50 per cent lesser parking space than commercial towers, effectively easing out traffic snags.

The DTMFZA approves the establishment and registration of companies in Tecom Free Zones and regulates all related procedures and matters including incorporation, registration and liquidation.

Another developer, on conditions of anonymity, admitted there was a glut in office space that was compelling him to rethink his project portfolio, mainly commercial.

"Companies are holding back on investment and not looking to expand. We still have time to change our strategy for projects that we haven't launched yet. One way would be to re-launch our commercial towers as mixed-use ones," he added.

Craig Plumb, Head of Research, Jones Lang LaSalle Mena, said: "While developers need to respond to changing market conditions, real estate is a long-term investment and there will be very few occasions when a tower designed for commercial use would be suitable for an alternative use such as residential."

He said it is important for developers to recognise the different needs of office and residential tenants as they require fundamentally different buildings.

"While there will be some projects still at the design stage that can be converted, these will be the exception rather than the rule."

Isthmus Partners said in a report that office stock in Dubai was about 30-35 million square feet with an additional 35m sq ft expected by the end-2011.

According to CB Richard Ellis, 0.58 m sq m of new office accommodation entered the Dubai market from both freehold and non-freehold locations last year.

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