The Dubai commercial property market continues to favour tenants as commercial landlords
across all areas of the emirate are becoming more flexible on rental values, according to the
latest report from Cushman and Wakefield Middle East (C&W), part of the world's largest
privately held commercial real estate services firm.
C&W’s Marketbeat Q3 2010 report provides a comprehensive summary of key economic
indicators, as well as a full breakdown of the office, retail and hospitality sectors for each
of the top 8 markets in the region – Bahrain, Kuwait, Lebanon, Oman, Qatar, Saudi Arabia,
Turkey and the United Arab Emirates.
KEY FINDINGS FROM DUBAI MARKET
• Outlook is of an overall downward trend going forward despite a slowdown in the pace of
• Landlords are becoming more flexible with rents as companies interested in buying or leasing
office space balk at unrealistic asking prices.
• An estimated 16-20 million sq ft will enter the market this year, keeping vacancy rates above
50% in secondary locations and around 12-15% in primary CBDs.
• Strong demand for high quality properties.
• Tenants are increasingly looking to secure long term fixed leases in order to take advantage
of the current situation.
• Average headline rents in prime locations are currently standing at AED 220-350 per sq ft per
annum, with the exception of the DIFC where rents are still around AED 300-350.
• Flagship malls such as Mall of the Emirates, Dubai Mall and Deira City Centre have become
more tenant orientated offering more favourable lease terms.
• Q3 headline rents flat year on year.
• The average retail rent currently stands at AED 220-240 per sq ft per annum, with flagship
destination malls commanding a 35-45% premium.
• Gross leasable area likely to remain stable at approximately 26 million sq ft cushioning
rents from falling further while maintaining current occupancy rates.
• Dubai has the highest occupancy levels of all eight countries surveyed, rising 5.5% year
on year driven by a 8.3% drop in average daily rates (ADR).
• Although Dubai has the third highest revenue per available room (RevPAR) for the year to date
at US$157 that still represents a decline of 3.2%.
Speaking at Cityscape Global, Mike Atwell, Middle East Head of Operations, Cushman &
Wakefield, commented: “With more than 16 million square feet of new supply entering the
Dubai office market in 2010 the balance of favour is not going to shift back to landlords any
time soon. The tenant is king for the foreseeable future.”