Expo to boost Dubai office demand
Dubai winning the bid to host World Expo 2020 will further accelerate demand for office space, which has gained momentum from early this year, according to a new report.
“Over the next year, we anticipate that office occupier demand will continue to rise. But development activity should also quicken, which in turn should keep rents fairly stable,” Knight Frank, a UK-based global real estate consultancy, said in its third quarter office market update.
“In the longer-term, if the emirate is awarded the 2020 World Expo, the office sector may benefit from a general uplift in economic sentiment.”
Dubai’s strengthening economic fundamentals and improving labour market have supported rise in prime office occupancy rates so far this year.
With economic prospects brightening, occupiers are increasingly looking to capitalise through expansion. That in turn has helped to boost demand for office space, albeit this, for the time being at least, is limited to prime stock.
Although landlords are achieving quoting rents on Grade A office buildings from smaller occupiers, they continue to offer incentives to larger “blue-chip” occupiers in order to secure a reliable income stream.
The Royal Institution of Chartered Surveyors has said that the UAE’s commercial property sector is back into the reckoning with growing interest from global occupier and investment segments.
The UAE market topped the Rics Occupier Sentiment Index and is second in the Rics Investment Sentiment Index. These indices are designed to chart how sentiment in various countries has changed compared with the previous three-month period.
On Thursday, the Dubai Chamber of Commerce and Industry (DCCI) said overall business environment in Dubai had boosted the expectation and confidence of business leaders across the emirate in light of Dubai's improved chances of hosting Expo 2020.
The DCCI survey highlighted a highly positive net expectation score of 82 per cent stating that the overall positive expectations are triggered by the general sentiment caused by the bid, which has received a very strong support from the private sector and Dubai companies.
Dubai’s GDP expanded by 4.4 per cent in 2012, faster than 3.3 per cent rise registered in 2011. Retail & trade and manufacturing were the biggest contributors to economic growth, adding 1.3 per cent and 0.7 per cent, respectively.
Already this year, Dubai’s economy has made a strong start with GDP growth accelerating from 4.1 per cent in the first quarter to 4.7 per cent in the second quarter, Dubai Economic Council data revealed.
- Focus on Dubai World Central
The World Expo 2020 win will put Dubai World Central master development in limelight.
Knight Frank says that investors, developers and occupiers are beginning to look at Dubai World Central as a potential hub of activity as Dubai is currently tipped as the favourite to be awarded the event.
The announcement that the passenger terminal is on course to be opened on October 27 is likely to stimulate further occupational interest from service providers and manufacturing firms.
When completed Al Maktoum International Airport will be the largest airport in the world, with five runways and a capacity of up to 160 million passengers.
Jones Lang LaSalle, a global real estate consultancy, said earlier that over half of the total upcoming office space between 2013 and 2015 will be delivered in Business Bay.
The majority of upcoming office space in 2013-2015 will be in Business Bay (56 per cent of total upcoming supply). Other locations that will see new office supply are DIFC (10 per cent), Jumeirah Lake Towers (10 per cent), Dubai World Central (7 per cent) and Dubai Investment Park (5 per cent).
Nearly 312,000 square metres of office space has been delivered in the first half of 2013, more than twice the space delivered in first half of 2012, JLL said.
Follow Emirates 24|7 on Google News.