Dubai’s prime office rents set to rise in H2

Rents in Dubai’s office segment are expected to pick up pace in the second half of this year, after average office rents across the emirate fell 4.5 percent in the year to June, according to a recent report by property consultancy Knight Frank.

“High occupancy in prime markets will continue to support rents, which supports our view that prime rents will rise further this year,” the report said.

Going forward, the consultancy forecasts that delivery of additional Grade A stock will offset any potential upside in rental values.

“We expected pockets of outperformance to be sustained due to limited availability of good quality stock in preferred locations, however on average rental value are expected to continue to fall marginally,” it said.

Prime rental performance was relatively stable in H1 2017, although market activity as a whole remained relatively subdued, the report said.

Average rents for prime office properties rose 1.3 percent in Q2 2017 as demand in the locations remained high due to limited new supply, free-zone status, international regulatory standards and the quality of local infrastructure.

Grade A office market rents – including Downtown Burj Dubai area, Sheikh Zayed Road and the Trade Centre District – fell 4.4 percent year-on-year (YoY) and 2 percent over the last three months.

The decline in rental values was driven by higher supply and lower levels of demand, the report said.

“In the city-wide market, the spectrum in quality of product has led to varying rates of both market performance and occupancy levels,” Knight Frank said.

“On average rents fell 7.5 percent in the citywide market in the year-to-June 2017 and 0.7 percent over the three months,” the firm added.