E&T
Commercial has officially launched! The new division of Edwards and Towers will
offer commercial sales & leasing, property management and investment advice
on commercial real estate in Dubai. We also provide valuations for accounts,
lending and dispute resolution. Do not hesitate to contact us if we can help
with your commercial real estate needs in any way.
So
at the start of a new year, where are we up to in the commercial market?
The
macroeconomic fundamentals for Dubai are improving. The Emirate’s population is
forecast to exceed 2 million for 2012, and GDP growth is anticipated to be in
the region of 4.5 - 5% throughout the year while inflation remains low. On the
back of these improvements, several large-scale commercial projects have been
announced including Mohammed Bin Rashid City, a, AED 10bn theme park in Jebel
Ali, an extension of the Madinat Jumeirah and the completion of the Business
Bay Canal. Significant questions surrounding the financial feasibility of some
of these projects exist, but it is clear that confidence has returned to the
sector.
The
office market, which has lagged behind other sectors since the 2008 crash, is
showing signs of improvement as more companies move into the Emirate to access
the growth that is developing here. The leasing deals we are currently doing
are supporting the fact that, in most areas of Dubai, rents have bottomed out
for office space. There have been increases in rents in prime areas such as
DIFC, Sheikh Zayed Road and Downtown Dubai. There is still a notable
discrepancy between rents for fitted offices and shell & core, with the
former usually commanding a premium in the region of AED 20 psf on average.
Furthermore, fitted space has a much shorter marketing period. Therefore as a
landlord, if you have access to a contractor at a reasonable rate, it is
advisable that you fit out your office prior to marketing; even if it is to a
basic standard; raised floors, suspended ceilings and provision of utilities.
This will significantly improve the results of your marketing.
The
retail market continues to perform strongly, benefitting from an improvement in
tourism and consumer confidence in Dubai. Rents are typically linked to the
sales of the tenant, and most retailers target a rent to sales ratio in the
region of 10%-20% in the bigger malls. This can mean rents are anywhere from
AED 300 psf to AED 2,000 psf (the latter being from tenants such as Jewellers,
who can generate high sales from a relatively small space). Retail rents and
values are set to continue their upward trend throughout 2013 as Dubai’s
economy continues to grow.
The
industrial market is fragmented in Dubai in terms of rental and capital
performance. Onshore, the average rents are in the region of AED 30-35 psf in
established areas such as Al Quoz and Al Qussais. Free Zone rents in areas such
as JAFZA are notably higher, more in the region of AED 40-50 psf. The latter
areas are set to see more growth based on the increasing levels of logistics
and trade in the Emirate, which is aligned to the overall economy.
2013
is set to be a positive year for commercial real estate in Dubai. We look
forward to working with you and assisting your commercial needs.
Simon
Kennedy BA MSc MRICS MBA
Director
– E&T Commercial
