The office space market in Dubai is becoming increasingly favourable for tenants, as it is seeing a significant demand-supply mismatch along with falling rentals and increased vacancies, a new report has said.
While demand levels are increasing, as both existing and new tenants seek to consolidate and take advantage of better quality space at more competitive terms, there is not likely to be enough demand to meet the high level of new supply entering the market, real estate advisory firm Jones Lang LaSalle (JLL) said in a report titled 'Dubai Real Estate Market Overview-January 2010’ released here yesterday.
The report covers the office, residential and retail markets in the city.
"The tenant is becoming the ultimate winner as the office market is going through a significant adjustment with more vacancies and cheaper rents on offer. This scenario is encouraging for businesses as it offers multiple options for expansion and relocation as Dubai becomes more competitive office location both locally and regionally," said JLL Mena managing director Blair Hagkull.
Attractive deals can be found throughout the city's prime and peripheral areas as rentals and capital values are hovering at pre-2007 levels. This is an opportune time for tenants as average annual Grade A rentals have fallen to around 220 dihrams per sq ft, said the report.
Average vacancies are likely to rise from their current level of around 33 per cent in 2010, much of which are in non-core locations, said the report, adding many global and regional tenants will not consider such spaces and a two-tier market is therefore likely to emerge.