Commercial office supply set to double in Dubai & Abu Dhabi
04 Aug 2010
(MENAFN) A real estate report released by Landmark Advisory said that commercial office supply is set to virtually double in Dubai and Abu Dhabi over the next 3 to 4 years.
The report titled (Q3 2010 Dubai and Abu Dhabi Real Estate Report) identifies that accelerated rent declines are helping to improve affordability in both emirates.
Director of Research & Advisory Services at Landmark Advisory said that new commercial properties coming online will infuse the market with higher quality office supply and drive down office rents, making both cities more attractive centers for business. The market now needs stimulus initiatives to leverage the improved affordability and to encourage the growth of industries that will diversify the local economies and fill the expanding vacancies projected over the next 3-4 years.
Residential oversupply in Dubai is also set to peak in 2012 with vacancies projected at 25%-28%. Meanwhile the commercial oversupply will continue to grow, with up to 45.9 million square feet of empty office space by 2014. Vacancies are expected to reach 53% in 2011 and peak at 58% in 2013/2014.
In Dubai, there has been a slight reversal of the coastal-inland villa bifurcation, however, coastal properties have maintained significant premiums up to 61%, depending on the unit type.
The report found that sale volumes slowed in Q2-10 compared to Q1-10; sale price declines accelerated to 5.0% for villas and 5.8% for apartments in Q2-10, a result of limited mortgage-backed transactions, particularly for apartments, which, based on Landmark?s transactions, were almost wholly cash transactions. In addition, limited buyer interest has forced motivated sellers to slash price expectations during the slower summer months.
In terms of leasing, villa rents fell 4.4%, while apartment rents fell 5.8% during Q2-10.