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August 31, 2016 | 15:55 | Dubai
Rents on prime office assets across the MENA region continued to increase at around the same pace recording an average growth of 11.3% per annum in the year to Q2 2016 compared to 11.9% per annum in the year to Q1.This confirms the ‘2 tiered’ nature of the market across the region with demand for space in ‘prime’ buildings in each city remaining the preferred option. According to JLL’s Office Global Index Report, Dubai ranks as the region’s top performer over the year with a growth of 20% – Dubai International Financial Centre (DIFC) reported as the Emirate’s prime office location – followed by Cairo at 16.7%.
“Office demand is proving resilient in many of the world’s dominant commercial real estate markets despite increased political and economic uncertainty which is leading to corporate occupiers striking a more cautious tone,” said Jeremy Kelly, Director in Global Research Programmes, JLL. “Underlying market fundamentals are sound, and corporate demand remains strong, notably in Dubai as office vacancy rates continue to decline in the DIFC. As a result, we have witnessed a boost in rental values within the DIFC unlike other locations where rental values have remained largely unchanged.”
In terms of overall performance and demand in Q2 for Dubai, the Central Business District (CBD) remains popular. This is evident through the high rental rates that currently average at around AED 1,922 per square metre meeting low vacancy levels. Cairo secured second place, also displaying robust annual rental growth of 16.7% per annum in the year to Q2. In contrast to Dubai, the city’s office rental growth was largely driven by relocations to higher quality spaces in more convenient locations.