Office space performance in 2018
Landlords increased incentives to attract and retain tenants as Dubai’s office market saw declining rents across most established office districts in 2018. Average rent for shell and core accommodation in Dubai declined by an average of 4% citywide.
The performance of International Grade A office spaces has remained broadly stable in terms of rent and occupancy due to the continued flight to quality among tenants. This is likely to come under pressure with a number of large scale completions on the horizon including ICD Brookfield Place and additional phases of One Central (World Trade Centre).
The UAE Cabinet recently announced that 100% foreign ownership of companies will be allowed in non-freezones for certain sectors. Dual licensing has been prevalent for just over a year, where the system allows foreign freezone companies to extend their operations to non-freezones. Dual licencing has also become more prevalent with DIFC, DWTC and DAFZ all permitting entities to have on and off shore operations within their freezones.
This means that companies will have a larger variety of options to choose from as they are not restricted to specific areas. Once this comes into effect, it is expected to lead to some relocations as larger corporate occupiers seek to consolidate and optimize their operations.
Impact on Dubai Residential Market
Any changes to the office market is bound to impact the residential housing market as investments, relocation and employment will drive residents to access their work places quickly and result in their moving homes. Communities near office centers such as Business Bay and Downtown Dubai will be also be impacted if businesses move away to other different parts of the city.
Since many off-plan projects are still awaited for completion in Dubai, it might just be the positive news that the residential market is looking for. Newer office spaces near new communities means resulting in timely completion as demand for houses increase in Dubai near upcoming work locations.
*Note: The basket of properties assessed has been rebased in 2018
** Source: REIDIN, Deloitte