Tuesday, April 27, 2010

Landmark Advisory Releases April 2010 Dubai Leasing Map, Highlighting Softening Rents

Dubai, United Arab Emirates – 27 April 2010: According to Landmark Advisory’s April 2010 Dubai lease guide, the risk in both the residential and commercial property markets continue to be the new supply forecast to enter the market during the next three years, which further encourages value-seeking behaviour among potential tenants.
“Lease rates in most areas, in both the residential and commercial markets, will fall in the coming months, especially for lower quality buildings in the least developed and integrated communities. However, certain residential units in key locations within established high quality developments will remain stable; this applies to specific villa developments and select apartment buildings,” explained Ms. Jesse Downs, Director of Research & Advisory Services, Landmark Advisory.
In this guide, Landmark introduced office rents, which have been gradually declining through 2009. “Although office lease rates may have appeared relatively unchanged in Q1 2010, recently rents have been gradually declining as landlords become more flexible in negotiations. The commercial market is witnessing increased supply from new developments like Business Bay where 6 million square feet of office space is due for completion this year. However, the majority of the new space in Business Bay is expected to be handed over in the fourth quarter due to infrastructure delays,” said Ms. Downs. “From our research we expect lease rates to decline further in most areas, especially for buildings with multiple owners.”
Landmark Advisory observed a recent increased in enquiries from companies considering relocating their operations to Dubai. These enquiries are coming not only from other emirates, but from companies across the region looking to expand into or relocate offices to Dubai. “While this is still a nascent trend, it is one that we predict will gather momentum over the next 3-4 years as commercial sale prices and leasing rates bottom out,” continued Downs. “In addition to improved affordability, the existing infrastructure, ease of recruiting, and higher retention rates will attract relocation demand in the coming years.”
Turning to residential apartments, increased supply has put downward pressure on rent in many areas, including some well-established quality locations. Places such as Palm Jumeirah and Dubai Marina have seen an increase in supply following new product deliveries with lower limits; 2-beds on the Palm Jumeirah have fallen 4 percent from AED 120k to AED 115k annum while 2-beds in the Dubai Marina have fallen 6 percent from AED 90k to AED 85k per annum. This is a typical trend observed in both recently-handed over buildings and lower quality buildings.

Landmark Advisory found that villa lease rates ranges have remained relatively stable with certain areas like Arabian Ranches, Victory Heights, and parts of the Lakes experiencing lower limit declines.


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