Dubai office space demand to rise on MENA unrest - report

Dubai office space demand to rise on MENA unrest – report

Sees further fall in average office rentals; Sees office vacancy rates up 44 pct; Average residental rental rates fell in Q1; Says private investors drive real estate investment

April 11, 2011 3:47 by Reuters

Demand for office space in Dubai could get a boost in the medium term from the recent unrest in the Middle East and North Africa as companies from volatile places relocate to relatively more stable markets like the emirate, according to Jones Lang LaSalle.
“This demand is, however, unlikely to offset additional supply levels, resulting in a further decline in average rentals during 2011,” the property consultancy wrote in its first-quarter Dubai real estate report.
The office market continues to see new supply entering the market, pushing citywide vacancy rate up to 44 percent, said the real estate group, which expects private investors to drive the Dubai real estate investment market in 2011.
According to the report, average rental rates in the Dubai residential sector continued to fall during the first quarter, but the rate of decline slowed.
If mortgage availability improves, lending rates stay low or fall further, and the government improves residency visa rules for property buyers, then 2011 will likely see the build up of buying momentum and selective price stabilisation, it said.
Retail malls continue to experience vacancies of 15-30 percent as retailers have taken advantage of greater competition among centres to close poor performing stores, the report said. (Reporting by Isheeta Sanghi;Editing by Vyas Mohan)