Did you know: Dubai rents 7 times cheaper than Hong Kong
For years now, Dubai has been perceived as one of the most expensive countries for office rents in the region and even worldwide. But one may want to think again after looking at the data revealed by the latest Knight Frank Skyscraper index.
In the index, Dubai ranks 18th most expensive in the world for office rent – nearly seven times cheaper than Hong Kong, the most expensive in the world.
Office rent per square foot (psf) in Dubai stood at $44 on average over the first six months of the year, according to the index, compared to $304 psf for Hong Kong.
In the Skyscraper Index, following Hong Kong comes New York at $162 and Tokyo at $140. San Francisco ranked in the fifth place at $117 per square foot ahead of London, which registered $110.
The index said that tenants are lucky since the average office rent per square foot (psf) in Dubai remained unchanged over the first six months of the year.
“Given the range of striking skyscrapers Dubai has to offer, we do not see a premium paid for higher floors in skyscrapers. Occupiers’ priorities are focused on the efficiency of the floor plates, as well as the amenities, vertical transportation and location of the building,” said Matthew Dadd, Partner – Commercial Agency at Knight Frank, to explain why rent prices remained flat in the first half of the year.
Slowdown in Dubai office market
According to the Dubai Real Estate report by Asteco, a property management real estate company, the emirate’s office sector continued to display little momentum, underpinned by a bearish market sentiment, low oil prices and regional uncertainties, which adversely affected potential upgrades and newcomers to the market.
Asteco’s report confirms skyscraper’s index that rental rates remained unchanged over Q2 2017, although landlords continued to be willing to negotiate terms and incentives.
“The average annual decline was marginal, at three percent, due to the continuing supply and demand imbalance. Nevertheless, demand remained for small, fully-fitted and serviced office space at competitive rates,” it said.
“The office market is unlikely to recover until economic sentiment improves in line with increased government spending, further implementation of diversification strategies and the anticipated gradual rise in oil prices,” it added.
Offices supply in Dubai
According to a report by JLL covering the second quarter of 2017, the Dubai office market saw the delivery of around 33,000 aqm in Q2 2017 with the completion of the Tamani Art building in Business Bay bringing the total stocks to around 8,788,000 sqm.
“A further 190,000 sqm is currently scheduled to complete in the second half of 2017, although some projects may be delayed into 2018,” it said.