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Dubai tops in Mena prime office rental growth

DUBAI, May 11, 2016

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, according to real estate expert JLL.

The Middle East and North Africa (Mena) Index rose by 2.7 per cent over the quarter, pushing the annual increase for the first quarter to 11.9 per cent, thus reflecting the demand for space in prime (the best quality) buildings.

Dubai was the top performer with over 20 per cent year-on-year growth with falling vacancies in the prime location - Dubai International Financial Centre (DIFC) helping to drive up rental values, stated JLL in its latest Global Office Index.

The performance of the DIFC was not, however, representative of the wider market, where relatively high vacancy rates have constrained rental growth, it said.

Abu Dhabi (with over 5.3 per cent) and Jeddah (over 5.3 per cent) also saw annual growth while rents elsewhere remained mainly stable, the report added.

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.

On the 2016 outlook, JLL said 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.

The prime rents will 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, stated the expert.

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, it added.-TradeArabia News Service




Tags: Mena | Dubai | market | rental | JLL |

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