Dubai remains office hotspot

Globally, Dubai’s office properties were ranked third after Oakland-East Bay and Dublin for year-on-year growth in rentals.
Globally, Dubai's office properties were ranked third after Oakland-East Bay and Dublin for year-on-year growth in rentals.

Dubai - Mena region records the highest rental growth of 11.9% among all regions

By Abdul Basit

Published: Wed 11 May 2016, 12:00 AM

Last updated: Sun 15 May 2016, 10:43 AM

Dubai recorded the highest growth in office rentals across the Middle East and North Africa with 20 per cent year-on-year increase, JLL revealed in its latest report on Wednesday.
Globally, Dubai's office properties were ranked third after Oakland-East Bay and Dublin for year-on-year growth in rentals.
Mena (Middle East and North Africa) region recorded the highest growth of 11.9 per cent among all regions. Europe ranked second with 3.4 per cent year on year growth, Asia Pacific third at 3.1 per cent, Americas placed fourth with 2.9 per cent growth in rentals.
Prime rents are forecast to remain largely stable in Mena over 2016 as most of the region's office markets continue to be tenant-favourable in the face of significant new supply and caution by occupiers. The 'flight to quality' seen over recent quarters is expected to carry on, resulting in two-tier markets with more robust demand for Grade A space and limited interest in secondary locations.
The Mena Index rose by 2.7 per cent over the quarter, pushing the annual increase for Q1 2016 to 11.9 per cent, reflecting the demand for space in prime buildings. Dubai was the top performer with falling vacancies in the Prime location - Dubai International Financial Centre (DIFC) helping to drive up rental values.
The performance of the DIFC was not, however, representative of the wider market, where relatively high vacancy rates have constrained rental growth. Abu Dhabi (+5.3%) and Jeddah (+5.3%) also saw annual growth while rents elsewhere remained mainly stable.
JLL said despite heightened financial market volatility and global economic uncertainty leading to a slightly more subdued picture for global office demand during the first quarter of 2016, supply shortages and limited new deliveries have kept the leasing environment highly competitive in many of the world's dominant office markets
Rents on prime office assets across the 95 major markets covered by the JLL Global Office Index rose by 3.6 per cent year-on-year in Q1, the fastest annual pace of growth in four years.
With the world's major real estate markets appearing to be back on track following a cautious start to the year, business sentiment is improving and corporate activity is expected to ramp up over the course of 2016, with leasing volumes projected to broadly match those of 2015 and some upside potential of up to 5 per cent.
Office leasing volumes in Asia Pacific were up seven per cent year-on-year in Q1 2016 and the region is expected to outperform with growth of 10-15 per cent for the full year, supported by robust outsourcing markets and the sustained strength of domestic occupiers in China.
Sydney is forecast to be the region's top rental performer in 2016, while Singapore is likely to see further declines; economic uncertainty and supply pressures are anticipated to result in more moderate overall regional rental increases in 2016. In Europe, occupier leasing activity is anticipated to continue to hold up in 2016. Most markets have joined the rental growth cycle, and a longer period of steadier rental growth is now forecast with some upside potential in the case of a more pronounced acceleration in demand.

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