Dubai ‘on path to rival London, New York’ with $1.36bn business park
The recently announced Emirates Towers Business Park is set to become Dubai’s most defining commercial development in over 10 years, according to Cluttons.
The real estate consultant said its launch is putting Dubai on the path to rivaling the City in London, or New York’s Wall Street.
While Dubai’s commercial real estate market has experienced muted growth over the past six months, the new project will be a “huge positive” for the market, it said in a new research note.
Faisal Durrani, Cluttons head of research said: “The project will meet the increasing demand for Grade A office space through low- and high- rise office towers catering to a range of requirements.
“Dubai is moving rapidly from being a regional hub to a global one and the new Emirates Towers Business Park is expected to compliment the Dubai International Financial Centre (DIFC), effectively expanding the city’s financial district and putting it on a path to rivalling The City in London, or New York’s Wall Street.”
The development, which is set to help triple the size of the wider DIFC by 2024, will provide a welcome source of relief to the dwindling supply of Grade A space in the area, he added.
According to Cluttons’ bi-annual Dubai Office Market Bulletin for Summer 2017, the overall quieter conditions in Dubai’s office market, that began to bed in at the start of the year, have persisted, with weaker-than-normal demand being reported across all quarters of the city’s office market.
Durrani said: “Faltering global economic conditions are chipping away at demand, with some reports of deals falling through in recent months due to a more cautious approach being adopted by some multinational organisations. Much of the activity we have been involved with recently has involved a consolidation of operations, across a number of different sectors.”
Cluttons said it has tracked a trend this year around the ending of many five-year leases which were initially signed in mid to late 2012 as the market began to rise following the financial crisis in 2009.
Occupiers who committed to new tenancies during this period are now faced with new rents that have on average, risen by 22 percent, if they intend to relocate, or downsize within a prime market.
Paula Walshe, head of international corporate services at Cluttons, said: “This is making savings based relocations more challenging even where tenants are significantly reducing their footprint, especially when capital expenditure for fit out and moving costs are factored in.”
Cluttons’ report showed that Deira was the weakest performing submarket during the first six months of the year. At the other end of the spectrum, rents in the DIFC core remain the priciest in the city, with occupancy levels holding at almost 100 percent.
The Business Bay area of Dubai has witnessed a rise in upper limit rents, making it the strongest performer in Dubai’s office market during the second quarter of 2017.