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Dubai | May 11, 2016 | 12:45
Despite heightened financial market volatility and global economic uncertainty leading to a slightly more subdued picture for global office demand during the first quarter of 2016, supply shortages and limited new deliveries have kept the leasing environment highly competitive in many of the world’s dominant office markets. Rents on prime office assets across the 95 major markets covered by the JLL Global Office Index rose by 3.6% year-on-year in Q1, the fastest annual pace of growth in four years.
With the world’s major real estate markets appearing to be back on track following a cautious start to the year, business sentiment is improving and corporate activity is expected to ramp up over the course of 2016, with leasing volumes projected to broadly match those of 2015 and some upside potential of up to 5%. Strengthening global occupier demand through 2016 and tight supply will drive continued rental increases, and JLL forecasts prime rental growth of around 3%-4% for the full-year 2016.
‘Flight to quality’ in MENA: The MENA Index rose by 2.7% over the quarter, pushing the annual increase for Q1 2016 to 11.9%, with demand concentrated in limited Grade A space. Dubai was the top performer (+20.0% YoY) with falling vacancies in the Dubai International Financial Centre (DIFC) helping to drive up rental values. Abu Dhabi (+5.3%) and Jeddah (+5.3%) also saw annual growth while rents elsewhere remained mainly stable.
Report Source: Rental growth continues at a healthy pace, JLL.
Full report available at: http://www.jll.com/research/178/jll-global-office-index-q1-2016