Business Bay to see maximum supply

More than half of the total upcoming office space between 2013 and 2015 will be delivered in Business Bay, according to a new report.

“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), JLT (10 per cent), Dubai World Central (7 per cent) and Dubai Investment Park (5 per cent),” Jones Lang LaSalle, a global real estate consultancy, said in its second quarter report on Dubai real estate market.

Activity in Business Bay continues to increase as the area offers more space availability and the surrounding infrastructure has been now completed.

Emirates 24/7 reported earlier that Business Bay projects have been divided as follows: residential units (19.9 per cent), commercial (14.2 per cent) and mixed-use units (65.9 per cent).

Similarly, activity in JLT has been improving with the area capitalizing on its free zone status to attract occupiers looking to be based in offshore zones.

JLT will also be home to the world’s tallest commercial tower.

Ahmed bin Sulayem, Executive Chairman, Dubai Multi Commodities Centre Authority, in an interview with this website revealed there was a possibility that the tower could even rival the 828-metre high Burj Khalifa, the world’s tallest tower.

“If the demand keeps pushing, my fear is that the tower might be taller than Burj Khalifa,” he said.

- More space delivered

According to JLL, 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. An additional 587,000 sqm could enter the market in the second half. The total office stock, at the end of Q2 2013, within areas monitored by JLL stood at approximately 7.2 million sqm.

Despite demand for office space continues to strengthen, activity remains focused on prime buildings in the top locations. The market continues to see a “flight to quality” with occupiers relocating from the old areas (read: leasehold) to the newer areas of Dubai. According to JLL, the current demand for office space is approximately 104,000 sqm.

“Demand continues to be driven by portfolio optimisation, especially among global occupiers. However, the emphasis is now shifting from reducing the floor space to a more efficient use of the space available,” the report said.

- Rent on rise

Average headline quoting rents in quality office buildings in selected areas have seen a rise of 8 per cent quarter-on-quarter (q-o-q).

The top open-market rent rose to Dh2,600 per sqm in the DIFC while it increased to Dh1,722 per sqm elsewhere in the CBD. Outside the CBD, prime rent reached Dh1,685 per sqm in Q2.

TECOM A and B, Sheikh Zayed Road and Downtown Dubai continued to see rental growth in the quarter.“Overall, the office market continues to improve, even though the growth remains concentrated within the highest quality buildings and the prime and newer locations,” JLL said.

Vacancy rates within the CBD remained unchanged at 31 per cent in second quarter as the take up was counterbalanced with the new supply entering the market.

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