Property prices are sky-rocketing everywhere across the globe. However, rents for offices in Dubai seem to have mellowed down this year. The Dubai real estate market is favoring tenants these days as rentals continue the downward trend, making office premises highly affordable for renting all across the emirates.
The latest reports on the Dubai Office Markets reveal a decline of 11.3% in the rental rates of the Dubai Science Park in the first quarter of 2019. This was followed by a drop in rent in the old Dubai areas of Bur Dubai and Deira, where the rates reduced by 11.1% and 6.7% respectively. However, many areas recorded a stable trend, as the majority followed the league, thereby giving some relief to tenants and rent-payers.
Talking about statistics, the median asking-rent for offices in Dubai dropped by 4.4% in the first quarter year after year. All across the city of Dubai, the median rent for a typical size office stood at Dh 90 per square foot this year, while the commercial office occupancy stood at 84%.
The supply has been outpacing the demand quotient since the beginning of 2019, thereby diverting the trend towards co-working spaces that cater more to start-ups and tech companies, where the fledgling companies prefer open desk spaces as they are more cost-effective.
During this current gloomy period faced by the office rental market, the landlords have become quite flexible and are offering special privileges to tenants, like rent-free periods, extended car parking facilities, shorter lease periods, and free upgradations, in order to secure their rent agreements.
Professionals in the field feel that this current scenario would continue through 2019, and thus landlords would carry on being gentle with their tenants so as to remain in business. However, prime quality buildings are the most stable sub-sector, where the demand is more consistent with more stable rental valuations.
Talking about the Dubai culture, people here believe in entrepreneurship, especially when the economy seems to be diversifying from oil-based industries to technology and knowledge-related start-up set-ups. Hence, in lieu of keeping at pace with the changing demands, landlords in Dubai need to buck up so as to remain profitable and in business.
Due to the softened activities of the office rental market in 2019 in Dubai, the present scenario has paved the way for a business-friendly rental environment. This is because both domestic and international organizations are taking advantage of the flexible policies by landlords towards leasing out their office premises. This, in turn, is only adding on indirectly to the economic development of this Emirates city.