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Government innovation drive spurs office sector in Dubai

January 2017

January 24, 2017 | 10:45 | Dubai

Spurred by the government’s innovation drive and desire to position the city as the regions’ leading tech hub, real estate indicators show that the technology-media-telecoms (TMT) sector is amongst the most active in Dubai, according to international real estate consultancy, Cluttons.

Cluttons’ bi-annual Dubai Office Market Bulletin for Spring 2017 confirms that the government’s push for this sector has undoubtedly fueled activity in this increasingly significant area, where high levels of expansionary activity have been recorded.

Faisal Durrani, head of research at Cluttons said: “The rising star in the office occupier market is certainly the TMT sector and the Internet City and Media City remain the core focus of this rapidly expanding and ever important sector for Dubai’s economy. The government’s recent Future-Accelerators Programme is paving the way for further strong expansion in this area over the short term. However, with limited amount of space available in high demand locations, interest is likely to rise in complimentary free-zones such as Dubai Science Park. Samsung, for example, has recently trebled its floor space, while Amazon Web Services announced plans to establish a new Middle East office in the emirate as it works to grow its presence in the region.”

Durrani concluded, “While 2016 was broadly punctuated by high levels of consolidation activity, notably from the oil and gas sector, but also existing occupiers looking at efficiencies through single-hub operations, a lot of that activity has all but subsided.”

According to Cluttons’ Dubai Bulletin, overall activity in Dubai’s office market remains muted. Throughout the course of 2016, 10 of the 23 submarkets Cluttons monitor registered decreases in upper limit rental rates, with Garhoud (AED 90 psf) ending the year 18.2% down while Al Barsha (-10%) and Deira (-9.1%) were the next weakest performers.

On the other hand, DIFC (AED 370 psf) emerged as the city’s best performer last year, with upper limit rents rising by 5.7%. Cluttons’ research indicates that these upper limit rents are reflective of rates in and around the Gate core, where as standalone third party schemes continue to command higher vacancy rates and lower rents.

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