Rents for the best-quality offices in Dubai are set to tick up slightly this year as occupiers resume shelved office searches amid an improved economic outlook, according to Knight Frank.
The broker said that after rising steadily to about Dh190 per square foot at the start of 2016, grade A office rents in Dubai dipped slightly last year as corporates put off leasing decisions amid oil price volatility and global economic uncertainties.
It said landlords have also responded to difficult economic conditions by offering greater incentives such as more flexible leases, free office fit outs, longer rent free periods and the inclusion of utilities in service charges.
But the company said that after oil prices staged a mini bounce at the end of 2016, occupiers are again starting to press ahead with expansion plans and leasing activity, pushing rents back to about the same levels they had been at the start of 2016.
Having crashed from highs of about US$120 a barrel in 2014, oil prices sank to a low of less than $30 a barrel last year before staging a partial recovery at the start of this year to hover at about $55 during much of the first quarter of the year.
“Our outlook for Dubai remains positive in 2017 as oil prices are expected to regain some of the losses previously recorded,” said Matthew Reason, a surveyor in Knight Frank’s Dubai office and the author of the report.
Earlier this year, Cluttons reported that top-band rents had fallen in 15 out of 23 Dubai submarkets monitored while they only increased in two, DIFC and Dubai Design District.
Faisal Durrani, the head of research at Cluttons, said that activity in terms of the take-up of new office space started to weaken during the second half of 2016.
“By no means would I go so far as to say that it had dried up but it was weaker than a year earlier,” he said. “I think that … nervousness around the health of the global economy is putting multinationals in a holding pattern. They’re holding off on expansion activities until things become a little bit clearer.”
lbarnard@thenational.ae
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