Sunday, May 11, 2014

After being the glitzy winner to host an international event of World Expo 2020 on November, 2013, Emirate business sector started showing significant gains. Rising demand for office spaces in Dubai clearly indicated that companies and businessmen are concentrating to inaugurate and expand their work setups in the city. Experts predicted that this trend will continue to grow as the positive trends are being observed in economy and real estate sector across the city. With the inception of infrastructure projects like airport expansion, other logistic and transport projects like extension of the red line of Dubai Metro, sizable augmentation observed for warehouse and logistic units. It is expected that this emirate will be the “Crane Capital” again with lots of mega projects in the pipeline.

Expectations with Expo 2020 win

It is expected that aggressive market performance and Expo 2020 win in year 2013 will probably result in lot of optimism and growth. After identifying the rising economy and business opportunities confidence level of entrepreneurs show more confidence and started showing interest in expanding their setups. Moreover, they are feeling more satisfied and realized that strong potential of earning profits has minimized the risks of failures. At the moment market is showing high level of activity. Stability in office sector is observed after an extended duration of limited activity. Significant demand is expected for both medium to small units.

How does progressing economy affect on commercial office supply?

Progressing economy and booming business sector drastically affect on supply of commercial office space units in prime freezones. Especially, Dubai Internet city and Dubai Media City (TECOM A&B) started showing rapid depletion in vacant units. Rising demand of business units also made it possible to increase the rents to 29 percent AED 180 per square feet during Q3 of 2013 and first quarter of 2014. Secondly the falling supply level of units in centrally located freezones is provoking the need of more units in secondary locations like Dubai Health Care City and the International Media Production Freezone (IMPZ). Market analysis revealed demand for office space is equally rising for both primary and secondary locations. Besides this, rises in demand is also observed for centrally located submarkets like Business Bay and Downtown.

Dubai commercial real estate- rising trends in year 2014

The steady increase of occupancy levels of centrally located “Grade A” offices is expected to continue and experts predicted very low vacancy levels in office space at the end of this year. In addition to that it is also observed that The Department of Economic Development, documented 12 percent rise in the number of business licenses issued during the last quarter of year 2013. The positive sentiment of business sector and economy indicated the certain demand for office space in Dubai. The shortage in supply, push developers to construct projects in secondary locations like submarkets of Downtown Dubai and Business Bay. Liquid occupiers like banking sector are likely to avail this option. The rising demand of commercial properties in Dubai has generated an unofficial quota system among landlords as they are now considering working with both the sectors.

Expectations are there that market will acquire this trend because building owners are now strategically thinking about their assets. The optimism in the industrial sector is also showing rises in demand for the first quarter in 2014. The initial preparation for the event of Expo 2020 around Al Maktoum international Airport and Jebel Ali Freezone have resulted in the rise in demand of business space in this area. Rents for industrial units are also moving upward in Dubai Investment Park (DIP).

The rising economic confidence and positive trends of business and real estate sector have remarkably increased the demand of commercial and industrial units across the city. And necessitate expanding existing freezones in the city to execute the demand.

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