Text size:

  • Small
  • Normal
  • Large

Standard Chartered avoids strata issue and opts to build own HQ in Dubai

Standard Chartered's decided to fund construction of its own headquarters in Dubai rather than deal with the empty strata buildings - with video.

After two years of searching for office space in Dubai, Standard Chartered last week announced plans to fund construction of a new headquarters in downtown Dubai.

Despite 40 per cent of office space in the city being empty and falling rents, the bank did not want space in any of the buildings with complex ownership schemes governed by Dubai's fledgling strata law.

"It is certainly the case that the amount of strata-titled buildings in the market limited the choices available to [Standard Chartered] with respect to existing buildings," said Nick Hughes, the bank's regional head of corporate property services.

Strata buildings have more than one owner, each responsible for paying service charges and maintaining common areas.

Strata is common in residential buildings but unusual in office markets where most buildings have single owners. It is most often found in smaller, boutique commercial buildings.

The impact of the strata structure on office leasing in Dubai, however, is expected to increase dramatically in the next few years, as more buildings with multiple owners come on line.

Forty-one per cent of the new office space scheduled for completion this year is strata titled, according to research by CB Richard Ellis (CBRE), the property consultant. That number jumps to 81 per cent next year and to 95 per cent in 2013, CBRE reports.

"It is having a very big impact," said Nicholas Maclean, managing director of CBRE in the Middle East.

CBRE's international clients typically "disregard strata buildings," Mr Maclean said. "Strata buildings are not even considered in many cases, regardless of the quality of the building."

However, in Dubai many developers recruited multiple owners to help finance large projects and minimise their exposure during the building boom.

The structure adds elements of risk and complexities for occupiers. If owners do not pay services fees, buildings can deteriorate rapidly, leaving tenants in substandard accommodation, analysts say.

The laws in Dubai governing strata laws are still in their early stages. The industry is still awaiting more details on how both tenants and owners will be protected, analysts say.

"There needs to be real focus on insuring that if a building is stratified that the owners are paying their maintenance fees," said Blair Hagkull, head of the Middle East office for the property consultancy Jones Lang LaSalle (JLL). "That has to be on top of everybody's agenda."

Back to the top

More articles


Editor's Picks

 The Greens, villas: Q1 no change. 3BR - Dh210-250,000. 4BR - Dh210-260,000. 5BR - Dh220-300,000. Q1 2013-Q1 2014 5% rise. Pawan Singh / The National

In pictures: Where Dubai rents have risen and fallen, Q1 2014

Find out how rental prices in the prime locations in Dubai have altered during the first three months of the year and the current rates you will pay according to data provided by Asteco.

 Miele coffee maker making Cappuccino at Miele Gallery in Sama Tower in Dubai. The cost of this coffee maker is around Dh 17,000. Pawan Singh / The National

Space-age coffee comes at a price from Miele

Miele have taken the coffee machine to a new level with its Dh17,000 offering that is built into your kitchen.

 The bridge of Seajacks Hydra, as the wind farm installation vessel undergoes finishing touches and testing works at Lamprell’s Hamriyah facility in Sharjah before its planned delivery on June 2, 2014. Jeffrey E Biteng / The National

In pictures: Building the Seajacks Hydra

The Seajacks Hydra, a wind farm installation vessel, is undergoing finishing touches and testing works at Lamprell’s Hamriyah facility in Sharjah before its planned delivery on June 2, 2014.

 The Wind, Energy, Technology and Environment Exhibition takes place from April 14 to April 16. Above, the Dewa showroom during last year’s Wetex. Jaime Puebla / The National

April corporate and economic calendar for the UAE and overseas

From Cityscape to Wetex to stock-market holidays to nations reporting first-quarter GDP figures, here is our helpful calendar of April's business events in the UAE and internationally.

 The rush of new supply of hotel rooms pushed Dubai occupancy rates down to 87 per cent. Sarah Dea / The National

Dubai hotel room rates rise 10 per cent

The rush of new supply pushed occupancy rates down to 87 per cent, a dip of 2.6 per cent from the previous year. Winter months are the strongest for Dubai hotels, with occupancy and prices falling to half their peaks by July.

 Get the latest information on credit cards, bank accounts and loan products in the UAE. Mark Lennihan / AP Photo

Rates report: Latest on UAE loans, accounts and credit cards

Souqamal.com brings you the latest interest rates on banking products in the UAE.

Events

To add your event to The National listings, click here

Get the most from The National