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22 February 2024

Office rentals remain subdued in January due to new supplies

The fall in office rents witnessed at Sheikh Zayed Road in January. Many areas in the city saw a drop of five to 10 per cent in office rental, according to Better Homes. (EB FILE)

By Shuchita Kapur

Office rental prices in Dubai remain subdued with a slight fall witnessed in some areas in January, according to the latest figures released by Better Homes.

Many areas in the city saw a drop of five to 10 per cent with rents falling most (by 20 per cent) at Sheikh Zayed Road. There are three main reasons behind this drop, said Porush Jhunjhunwala, Head, Commercial Leasing at Better Homes.

"The reason [for the drop in rents] is that property owners who were holding the prices all this while and could not achieve the desired prices are being realistic and releasing their stocks. Secondly, tenants are still holding on to their decision, thus delaying their requirement to move on and lastly, we have seen more existing companies giving away additional space and new supply coming in these locations," he told Emirates Business.

Office rents dropped in areas such as Bur Dubai, Karama, Deira, Garhoud, Qusais, Sheikh Zayed Road, Barsha and Tecom Sector C.

However, there are some areas in the city where rents have picked up – such as DIFC. "Though we have seen some stability only in A-grade office buildings over the last quarter of 2009, the rentals for grade A offices are still high and we could expect some correction moving forward," said Jhunjhunwala.

The Better Homes expert, however, said it was difficult to predict what exactly will happen this year.

Some analyst in the market have said that it has probably bottomed-out but there are institutions such as UBS, which is predicting a further fall in property price in the city.

Recently, a report by CB Richard Ellis said lease rates in Dubai's central business districts are likely to stabilise during the first quarter of this year. According to CB Richard Ellis, vacancy rates in central business districts will not change much but new stock is expected in secondary locations, which may bring good news for tenants.

"It's too difficult to forecast how much the market will further correct at this stage. We have to take each month at a time," Jhunjhunwala stressed.


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