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Dubai to scale new commercial heights

(News - Detail)

Date : 09.09.2008

Dubai, a city of tall towers and even taller ambitions, could soon become the most expensive commercial real estate location in the world. Recent reports already place the emirate sixth on a list of the world`s costliest office space cities behind commercial big-hitters London, Moscow, Hong Kong, Tokyo and Mumbai. Meanwhile in the shiny, optimistic skyscrapers of Dubai, where the sun always shines, the sky is quite literally the limit when it comes to real estate. Voracious demand for office space is forcing prices through the roof and supply lags years behind. It`s possible that spiralling costs may deter companies from setting up larger headquarter type offices in Dubai, prompting instead the setting-up of smaller, representative arms of businesses giving investors a presence in the Middle East, but not a head office.

It`s hard to see prices coming back down to earth much before 2012, but what happens after that is the big question for the UAE right now. As of today, Dubai has around 19.1 million square feet of office space which boasts an incredible 98 per cent occupancy rate. Of the commercial property that is sold, most is snapped up off-plan as developers strive to keep up with demand. Between now and 2012, 75.8 million more square feet will enter the market. With more commercial property finally available in the UAE, it will be interesting to see what happens to prices both here and abroad. There isn`t many places in the world with as much development planned as Dubai in particular and the UAE in general. Dubai International Financial Centre, Business Bay, Burj Dubai complex - all these places have been designed to tempt companies to set up shop in Dubai.

The cost of building supplies will continue to increase as the global market experiences a slow-down, and that may push prices up even further. It could also affect building schedules here, but a quick flick through the raft of mixed-use and office specific developments announced almost daily in the UAE gives some indication of the buoyant optimism in the market here. Inflation was pegged at 11.3 per cent at the end of 2007, while rent rose by 17.5 per cent. But instead of being a prohibiting factor, these spiralling costs have not seen a slow-down in the property market in 2008. According to a recent market study, Dubai has seen a 136 per cent increase in property sales in the first-half of the year and there seems to be no sign of this changing at present.





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