Dubai sees demand for office space
Dubai, March 9, 2011
Enquiries for leasing office space in Dubai were up 20 per cent in the first two months of 2011, according to the latest figures released from UAE-based property management company Asteco.
The rise is being driven by a number of factors, such as flight to quality within Dubai and the Northern Emirates and inflow of capital from international and regional investors and corporations amid regional uncertainty, remarked Asteco ahead of its Q1 2011 report.
Elaine Jones, CEO of Asteco Property Management, said the UAE’s political stability, well-established financial credentials and strategic location has always attracted inward investment and currently could well be viewed by many as a safer haven.
“Many organisations wishing to mitigate risk are likely to seek more stable business locations such as Abu Dhabi and Dubai. One benefit of this is that it at least maintains a regional foothold and or alternative business location if only temporarily,” she noted.
International bank Credit Agricole estimates that the Egyptian economy is losing as much as $310 million per day, as political uncertainty continues. It has already been widely reported that businesses are now facing the consequences of a corrupt regime that has allegedly ‘stolen’ over $40 billion from the public purse, said the report.
According to Bloomberg and other agencies, leading international brand names including Coca-Cola, Cisco Systems, GlaxoSmithKline and Volkswagen are among those to close their offices in Cairo, at least until domestic security and trading conditions improve.
The pharmaceutical company GlaxoSmithKline alone employed some 900 people in Egypt.
'Danish shipping giant A.P. Moller-Maersk, maybe considering relocating its Middle East headquarters. The world’s biggest container shipping company, which employed more than 7,000 people in Egypt, has closed its offices in the country,' said Jones.
In maintaining an on-the-ground presence, it is likely Dubai will be high on its list of potential new regional headquarters, she observed..
'The growth in enquiries for office space at Asteco also supports other indicators of a strong local business climate, with Dubai Economic Development announcing recently that they had issued 13,817 trade licences in 2010, a 17 per cent year-on-year increase,' she added.
Jones pointed out that although prices for office space have slipped by 10 to 15 per cent since Q1 2010, the decline is now at a much slower rate.
“The market is displaying remarkable resilience, especially with so much new supply still coming online. It is absorbing much of the new supply without having any significant detrimental impact on leasing rates,” she added.
Approximately 15 million sq ft of office space was added to the market in 2010, taking total office space in Dubai to 48 million sq ft, said the Asteco in its report.
Occupancy levels vary depending on the development, but on average the vacancy levels were estimated at 38 per cent last year and could rise to 50 per cent if the projected 12 million square feet of commercial space is handed over in 2011, it added.
There have also been considerable internal movements with areas such as Sheikh Zayed Road, DIFC, Barsha and JLT witnessing higher levels of enquiries due to company’s focusing more on location, value for money and quality, the report said.
Vineet Kumar, head of Business Development at Asteco Property Management, said, 'Much of the recent rise in local enquiries is focused on the flight to quality, a trend Asteco identified in early 2010.'
'Companies can now relocate and upgrade within Dubai to quality office space for little or no supplement, with most of the leasing enquiries for 1500 to 3000 square feet of space in single owner developments,' he added.-TradeArabia News Service
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