DUBAI — Dubai has now one of the highest global rental yields for commercial premises at 17-18 per cent, with huge increases in capital values recorded in locations where new buildings are near to completion.
Property management company Asteco stated this yesterday, but added that next year Dubai would still witness a shortfall of 18 million square feet of office supply, 29 per cent of which will come from the Business Bay development, due to construction delays. Quoting its fourth-quarter report, Asteco said that rent for office space rose five per cent on average over the last quarter. Offices on Shaikh Zayed Road and Oud Metha had the biggest rent hike at six and 12 per cent respectively. But compared to last year, office rental in Dubai jumped 44 per cent, with occupancy rates of 97-99 per cent. "The price increases reflect the fact that Dubai's commercial sector has almost no liquid secondary market at present," said John Allen, director of research valuation and consultancy at Asteco. He stressed that the "persistent market undersupply" that prompted rental fees and property prices to rise was due to the poor delivery of new offices over the past few years.
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