Dubai’s office market has seen a surge in inquiries from the UK and Europe, along with other international markets. This is according to a new report from commercial real estate experts Cushman & Wakefield Core. It says there is a strong drive among companies “wanting to expand in Dubai due to its favourable and open business environment”.
“In addition, Dubai is also seeing an influx of many international firms relocating their staff and operations from Russia and Ukraine,” said Robert Thomas, head of agency at Cushman & Wakefield Core.
This trend is demonstrated by the record number of licences being issued and by a higher number of new Ejari registrations in Q1 2022 (53% new registrations compared to 47% renewals).
“Sectoral demand continues to be led by the services and technology fields, particularly fintech. In addition, with progressive cryptocurrency regulations and frameworks in place, Dubai is attracting many cryptocurrencies related businesses,” Thomas added.
The lack of quality units in sought-after buildings is driving average asking rents up across most of the Dubai office districts.
According to Cushman & Wakefield Core figures, over 480,000 sq. ft of total office space was delivered in Q1 of 2022 bringing the total Dubai office space to 107 million sq. ft.
Major deliveries include two buildings in Park Heights Square in Dubai Hills by Emaar and the next phase of the Deira Enrichment Project by Ithra.
Over the remainder of 2022, a further 1.07 million sq. ft of office space is forecast including Uptown 2020 in JLT, the next phases of CommerCity and the first phase of the District 2020 office portfolio.
“We have seen occupancy levels improve steadily over the last few quarters across both Grade A and Grade B stock with Q1 2022 city-wide occupancy levels at 81%, the highest it has been in the last 5 years,” added Thomas.
The sharpest rises in average year-on-year office rents were seen in Sheikh Zayad Road (35%), One Central) (29%), Business Bay, JLT (29%) and Downtown Dubai (16%). Old Dubai districts of Bur Dubai, Deira and Garhoud which struggled to maintain headline rents for years are also reporting double-digit rental increases.
“We are witnessing a rising number of enquiries from new business centres and have seen prominent global flex-space operators and local providers see near full occupancy.”
Many freezones, large single landlords-operated business centres and CAT B (ready-to move-in) spaces are also demonstrating a similar trend with very nominal availability.