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Dubai ... most favoured location for corporate occupiers.

Occupancy-rental gap likely to widen in Mideast region

DUBAI, June 9, 2015

The performance gap between projects offering high quality amenities, sufficient parking, accessibility and international standards of property management, is likely to widen in terms of higher occupancy and rental levels, a report said.

Corporate real estate teams and decision makers are becoming more aware of the role their physical space plays in promoting productivity and efficiency, added the Mena Occupier Sentiment published by JLL, a global real estate company, which provides insights into the current conditions and future expectations of corporates based in the region.

Office space within developments with a significant residential, leisure, and other components are becoming more popular. As office densities increase and flexible working becomes common; people may work from their desk, at home, or public spaces.

International property management teams have proven to add value to tenants by undertaking lease renewal negotiations, ensuring tenant satisfaction, reducing operating costs through energy and sustainable management practices, and maintaining the overall security and maintenance of the office building.

 

LIMITED INCREASE IN THE QUANTUM OF SPACE DEMANDED

While the level of enquiries continues to increase in most Mena markets, the majority of corporates are currently focused on utilising their existing space more efficiently, rather than relocating to new premises.


JLL data on net absorption reveals that while demand is still active in Dubai, the preferred growth market, activity has slowed down in 2014. Net absorption averaged 112,000 sq m over the past 4 years (Q1 2012 – Q1 2015), closely in line with the 109,000 sq m annual increase in supply.


Corporates are trying to achieve short-term cost savings through real estate initiatives such as refurbishment, as opposed to relocation and expansion.


As Mena markets are expected to witness the delivery of further Grade A office space over the next couple of years, corporates should find it more attractive to expand their premises or relocate.

SIGNIFICANT CHANGE IN THE USE OF SPACE


Workplace transformation is taking on a new significance at the global level, as corporates respond to changing economic conditions, with a continued emphasis on cost control and efficiency gains.


Corporates are re-designing their workplaces to create more open, collaborative and flexible spaces and are increasing their use of alternative workplace strategies such as hot desking and remote working, as opposed to traditional enclosed offices.


This is supported by technologies such as web conferencing, which have driven global connectivity, increased mobility, and have aided in re-designing workplaces.


SUSTAINABILITY PREMIUM – PROVIDING OPERATIONAL COSTS CAN BE REDUCED


Although Mena generally lags behind other global regions on green building legislation, there is an increasing recognition among corporates of the impact that sustainable buildings have on businesses from an operational standpoint.


“This is evident from our discussions with corporates, which reveal there is a willingness to pay a rental premium for sustainable buildings providing they result in savings in operating costs, and therefore total occupancy costs over the length of a corporates’ tenure,” said JLL in the report.


Responding to this trend, more developers are now seeking LEED certification to differentiate their buildings from the rest of the market, particularly in Dubai, it added.

GROWTH MARKETS

The UAE’s macro environment remains strong and conducive to corporate growth and investment. The political and social unrest that has swept across the Mena region since 2011 has confirmed the UAE’s position as a ‘safe haven’ within a volatile region.

Within the UAE, Dubai has cemented its place as the preferred business and financial centre within Mena.

Its success at diversifying its economy, supported by a strong private sector, has acted as a buffer against recent falls in oil prices, and allowed Dubai to achieve stronger economic growth than the rest of the UAE in 2014/2015.

The emirate is expected to consolidate its position as the favoured location for corporate occupiers in the Mena region over the next three years.– TradeArabia News Service




Tags: LEED | Rentals | JLL |

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