Dubai Office Rent: Still Among the Top Ten Places

Dubai has been observed as the eighth most expensive place on the globe to rent office in Dubai despite the crash in the property rates in Dubai. This was revealed by the latest report given by CB Richard Ellis.

Since the fall is universal, Dubai stands still among the top 10 priciest places to have an office despite of the drop of 27.3 % in office rents.

The office space presently costs $108.91 per square foot. However, Dubai is still far behind the West End of London which fetches rents worth $184.85. Dubai is fine ahead though, of its immediate neighbour Abu Dhabi where rents have gone down by 38.6 % touching $84.4 per year. It also stands ahead of London City market at the ninth place globally.

The best performing market was Aberdeen in Scotland, which suffered a 12-month decline of 12.3percent, touching $65.62.

The report confirmed that the “financial crisis has made an impact on the world's office markets and the US dollar, has been particularly weak in 2009. Europe, Middle East and Africa continue to have the largest number of markets and are on the top 50 list while London's West End is still the world's most expensive market. Other markets in the region ranking high on the list are Paris, Moscow, Dubai and London City.”

Meanwhile, the real estate broker Knight Frank LLP said that 40 percent of Dubai's office space is currently empty after the emirate's construction pace surpassed demand, Bloomberg had reported.

“Vacant office space in Dubai totals to 10mn square feet at present. However, if developers meet the current completion dates, total office space will double to touch six million square meters by end of 2011,” reported the research by broker Colliers International, which also placed vacancy rate at 40 percent.

Revision of Rent Laws by Emir

The Rent Law in Middle East has been revised leading to the rise in complexity of eviction of the tenant from a rented property.

According to the new Rent Law No.(20) of 2009,issued by The Emir H H Sheikh Hamad bin Khalifa ,the revision does not give right of raising the rentals to the landlord. In addition to this, a landlord cannot ask his tenant to vacate the property unless the property is needed for his/her personal use or the use of any of his legal dependants. Moreover, the landlord in this case, should also give the notice to his tenant at least six months prior to the requirement.

The revisions were implemented after reviewing the draft law proposed by the Cabinet, considering the views of the Advisory Council and assessing the Constitution and related laws.

Tenant’s Perspective
•    The new law averts any increase or alteration made in tenancy contract for first two years.
•     Landlord must provide the property in sound quality.
•    Article 16 of this law puts the responsibility of property maintenance on landlord. But very next article states that landlord shall not make any change which will affect the tenant benefit in any way.
•    Tenants should be sure that only the contracts which are in written form and registered with RERA will be valid.

Landlord's Perspective:

•    Landlords will be constrained to decide rent at the time of contract for two years. Keeping this in mind they can decide a reasonable rent, as per the future economic changes
•    The landlords are free to receive rent value on agreed dates.
•    Any changes to property cannot be made by the tenants without landlord's consent
•    Tenants need to pay the entire taxes due to the Government.

Any complaint from a tenant will not be received by the Rent Dispute Settlement Committee (RDSC) set up by Law No. 4 of 2008, unless the tenant confirms a rent contract registered at RDSC office. However, tenants who seek a proof of landlord-tenant relationship for leases which were signed before February 15, 2008 can approach RDSC without contract.

Rent And prices In Dubai To Get Stabilize

In certain areas in Dubai, there are seen some early signs of recovery as the rent and prices are getting stabilized. This is first seen in Dubai property market as the areas started to see the recovery include Dubai Marina, Emirates Living and Downtown Burj Dubai. This is because that these property projects are of higher quality and is very much attractive especially for people commuting to Abu Dhabi. The communities like The Springs, Downtown Burj Dubai and Jumeirah Beach Residence have not been affected majorly by the decline in the rent as these communities have seen the most inquiries as far as the tenants are concerned.

The residential areas in New Dubai have been explored by people and are still exploring by those who are working in Abu Dhabi as New Dubai is in close proximity to the UAE capital. According to the last industry reports, house prices and rents have significantly relieved in Dubai. The tenants are mostly looking residential units in community developments and they are majorly looking for three to four bedroom townhouses and one to two bedroom apartments. Moreover, the apartment and villas are eased by an average of 15 and 13 percent. Apartment and villa prices have really dropped.

As the property prices have begun to stabilize, Palm Jumeirah has shown a surge in sales prices for apartments and villas to about 20 percent and 7 percent in the second quarter. The agents said that in the first quarter four bedroom garden homes on The Palm were selling for Dh6.5 million which was earlier selling for Dh14 million. Moreover, it got changed in the second quarter as the average rent for studios eased from Dh61,500 to Dh45,000. Thus, these statistics show that the prices have greatly reduced therefore; the prices and rents are being stabilized.

In Q3 Dubai Rents are expected to Decline Further

Dubai is expected to face the signs of rent stabilization. According to landmark advisor the rents for residential property units in real estate in Dubai will further decline in the third quarter. The Director of Research, Landmark Advisory, Jesse Downs said: “For the Dubai market, there are distinct signs of market stabilization and a return of confidence from end-users. Sale prices have even increased in some cases. This increase is largely due to the dynamics of each development.”

According to the Landmark, the sharpest decline was seen in the apartments and there was an oversupply of this segment because of combining of the economic downturn and quality of high-rise apartments completed in the year 2008. Earlier, price differentiation was based on factors such as location, quality finishing and views etc; however they have now been replaced with other factors. The developments which are experiencing price increase are smaller villa developments. Among end-users these developments follow value recognition in terms of its quality, amenities, layout, location and all. If we compare Landmark’s May guide with that of June, it shows that Palm Jumeirah has now got stable rents while a fall of 7 to 25 percent could be seen in Dubai Marina studios.

Jesse Downs believe that distressed sale opportunities are largely furnished as the sellers have refused to lower down the prices which already exist. For sough-after residential developments with limited availability of homes, buyers are paying high rates in some cases. Rent guide is developed by using the broker survey, mystery shopping and transactional data. She further added: “Dubai tenants will see even more opportunities to upgrade their accommodation as rents will continue to fall. However, high-demand areas will experience a faster rent rebound as deal-seekers rush in.”

Dubai Property: DIFC Faces 40% Fall In Commercial Rent

According to a report from a leading consultancy firm CB Richard Ellis (CBRE), commercial rents in Dubai International Financial Centre (DIFC) have fallen by 40 percent in the last six months. The report said the rents have fallen by a considerable amount and landlords are offering further diminution on rents.

This property in Dubai is considered the financial hub of the city. It enjoys its unrivalled location, situated in the heart of Dubai city. Dubai International Financial Centre offers world class infrastructure which facilitates various companies to carry out their business effectively. According to Mathew Green, Associate-Director-Research suggested that the rent offered in DIFC is far suitable than several other locations in Dubai. With state-of-the-art facilities offered in Dubai International Financial Centre, it created huge demand for office spaces. The consistency of demand was seen since 2004 and 2008 had a long list of people waiting to book their space. This was mainly due to being located close to Sheikh Zayed Road.

Nicholas Maclean, Managing Director of CBRE said during the past one year drive in the market has been primarily from the financial sector, as several companies want to be situated close to DIFC. Other developments such as the business district of Downtown Burj Dubai- Emmar Square has created considerable amount of demand for office spaces. Not forgetting, Business Bay is one of the most renowned locations for office buildings in Dubai city. Since, all these developments are located on the Sheikh Zayed Road soon they would compete with the new World Trade Centre.

The CBRE report stated there has been a fall in rent in Dubai offices by 18%, during the first quarter of the year. The reports said, the landlords of the properties, located away from the business districts, are offering extra incentives to attract tenants.