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Expo 2020 injecting confidence into Dubai’s commercial property markets
Occupier demand continues to reflect the confidence injected into Dubai’s commercial property market through the Expo 2020 win and overall increase in economic activity, a new report suggests.
Linked to this has been a steady rise in the level of demand for prime Grade A space in particular and as a result of the strengthening demand, rents have continued to climb, says the latest commercial property market report from Cluttons.
During 2013, prime office rents rose by 8%, with a further 10% increase being recorded in the first quarter of the year, pushing average Grade A rents to AED220 per square foot.
The report points out that as a result of the economic vigour, several firms are expanding their footprints and some are focussed on achieving this by consolidating their operations into a single location.
Furthermore, the propensity for multinational organisations to relocate their regional teams to Dubai continues to gather pace as political uncertainty and conflict persists in parts of the region. ‘In particular, we have recorded a shift away from cities in Egypt and Lebanon, with some organisations permanently moving staff to Dubai,’ the report says.
The rising tide of occupier demand is having a knock on impact on supply, which is rapidly being depleted in free zone submarkets such as Dubai Internet City and Dubai Media City (TECOM A&B).
The upturn in occupier requirements has helped to drive upper limit rents in TECOM A&B by almost 29% to AED180 per square foot between the third quarter of 2013 and the first quarter of this year.
The report explains that the falling supply levels in centrally located free zones is aggravating demand for space in more secondary locations such as Dubai Health Care City and the International Media Production Free zone (IMPZ), with both recording rising levels of interest from occupiers.