2022-05-14-莱坊-Dubai_Office_Market_Review_Spring_2022_5页_2mb

Dubai Office Market Spring 2022 Summary

Market Recovery

Prime office rents in Dubai have recovered to or exceeded pre-COVID levels in several submarkets. For instance, Business Bay rents surged from AED 76 psf in Q1 2020 to AED 101 psf in Q1 2022, representing a 30.2% year-on-year increase. Similarly, Downtown Jebel Ali and JAFZA showed significant growth with rents climbing to AED 95 psf and AED 125 psf, respectively.

Key Trends

• Business Bay's recovery is fueled by its halo effect from Downtown, residential developments, and improved transport infrastructure, making it approximately 34% cheaper than Downtown while attracting premium demand.
• The industrial sector, particularly healthcare and manufacturing, is driving demand and job creation, with Oxford Economics projecting 127,000 new jobs by 2026.
• Hybrid working models are increasing average space requirements to 8,000+ sq ft, boosting demand for flexible and serviced office spaces, despite some business footprints shrinking from start-ups and remote strategies.

Sector-Specific Growth

• Banking & Finance, healthcare, and logistics sectors led early 2022 demand, with healthcare dominating requirements at 55.3%. Free zones like DIFC remain popular, with low vacancy rates pushing rent stability.

Miscellaneous Factors

• Introduction of Corporation Tax from 2023 in the UAE is expected to have minimal negative impact due to existing tax treaties.
• Market imbalance is creating upward pressure on rents for high-quality buildings, while older stock faces deprecation.

Data Highlights

• Rental changes show fluctuations across submarkets, with Business Bay and Downtown Jebel Ali experiencing the highest year-on-year increases.
• Demand from sectors like healthcare is sustaining growth, with ongoing monitoring for economic impact abatement.