Dubai remains a competitive location for premium office space, says JLL report
Dubai’s DIFC (Dubai International Financial Centre) ranks 19th of the 54 global office markets covered by JLL’s Premium Office Rental Tracker
Occupancy costs for Premium office space in the DIFC in Dubai remained largely unchanged over the past year at $94 per square foot per year (with this figure including the net effective rent plus additional fees and service charges). This places Dubai behind London (West End: $193; City: $108) and at a similar level to other second tier cities within Europe such as Stockholm ($94) and Moscow ($89), but ahead of other leading cities such as Frankfurt ($73) and Paris ($52). These cities command the highest office rents in EMEA on account of their strong attraction to corporate occupiers.
Corporate activity is generally increasing across those European hotspots which combine relative affordability with a high quality talent pool and a good quality office space.
Toby Hall, Head of Office and Business Space Leasing, UAE, JLL said, "Corporates are becoming increasingly aware of how their real estate can be a powerful tool in the war for talent and in increasing employee productivity, and this is impacting decisions on location and office types. Recent JLL research** found that only half of 7,000 employees globally and regionally felt their workspace allows them to work completely effectively and this is an important statistic for both corporates and investors who want to future proof themselves."
"The DIFC in Dubai is a great example of a market which offers premium office space in a competitive city which attracts global talent and innovation. The demand to have more premium office space has significantly increased and we will be observing an upsurge in supply of improved quality space across Dubai over the coming few years," he added.
Occupancy costs for premium space have increased by an average of 4% in USD terms during 2017, but this is not the case in Dubai, where no increase was recorded during 2017.
As with other global markets, the level of vacant space within premium buildings in Dubai remains below that in the general market, illustrating the demand among tenants for space in the best quality buildings. While there is greater occupier choice in the overall market, space in premium buildings remains limited, with vacancies in premium buildings remaining below 5% in Tokyo CBD, Hong Kong and London. The same trend is apparent in Dubai, with vacancies in the premium space in the DIFC and the CBD far below that of peripheral office sub-markets with inferior quality space.
The shortage of premium space in the DIFC has encouraged developers to commence or complete a number of new projects in this location in recent years. The most prominent of these is ICD Brookfield Place, which will be benchmarked against the British Council for Offices (BCO) and the Middle East Council for Offices (MECO) Best Practice design guidelines and is being developed in a joint venture between the Investment Corporation of Dubai (ICD) and Brookfield Property Partners.
"Upon completion, ICD Brookfield Place will set a new benchmark for the quality of office space in Dubai, with more than 96,000 sq m of premium office space spread across 53 levels," commented Hall.
The annual Premium Office Rent Tracker (PORT) compares premium office occupancy costs* across 54 markets in 46 major world cities and finds that the Eurozone offers among the most competitive costs globally for premium space, averaging $63 per square foot per year, compared to $85 in the Americas and $111 in Asia Pacific, Warsaw ($40), Brussels ($48),Amsterdam ($49), La Défense, Paris ($52) and Berlin ($56) are named as some of the best value-for-money markets in Europe.
Outside of the Eurozone and the Middle East, the most expensive premium office rents globally are found in Central Hong Kong ($323), New York's Midtown ($194) and Beijing, Finance St ($190).