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Dubai’s office sector has remained resilient in the first half of 2022, mainly due to continued demand for Grade A office space, which has also led to a sharp drop in vacancy rates in the sector.
According to the Savills Dubai Office H1 2022 – Market in Minutes report, tenant demand has been strong against the backdrop of a booming local economy, companies making their expansion plans and an influx of senior executives, business owners and high net worth individuals (HNI ).
According to the most recent Savills Office Costs (SPOC), Dubai had the highest level of office utilisation in Q2 2022 among the EMEA cities tracked by Savills, with an average of 80% of staff Return to the Dubai office in some capacity. Report.
room for upgrade
Paula Walshe, International Corporate Services Director, Savills Middle East, said: “Businesses are increasingly recognizing the importance of upgrading existing spaces or moving to new locations to better meet their new needs, which are Popularity has changed. Many of our customers have found better value in consolidating their operations, which allows them to focus more on a backdrop of rising operating costs while saving significant money.”
Swapnil Pillai, Associate Director, Middle East Research, said: “In the pursuit of quality, tenant preferences for Grade A space continue to shift in general, driven by growing focus on ESG compliance and the right size of existing real estate footprints, cost and operational efficiency. .”
“Further diversification of the economy and the emergence of new industries such as virtual assets are driving a wider profile of tenants,” he added.
Rent appreciation
Rental values increased by an average of 10% compared to the second half of 2021 and around 13% year-on-year, driven by increased occupancy at key Grade A developments in Dubai. According to the SPOC report, rents are rising in some markets, especially for ESG-compliant spaces, as occupier demand continues to support the premium segment. Overall rents in Dubai rose in the second quarter, Savills said.
The bulk of leasing activity in the first six months of 2022 occurred in submarkets such as DIFC, DWTC, DMCC, Dubai Media City and Dubai Internet City. In terms of rental performance of office locations, Dubai Investment Park (35%) saw the highest year-on-year increase, followed by Barsha Heights (29%), Dubai Production City (27%) and Deira (25%). Meanwhile, Dubai Internet City, Dubai Media City, Dubai Knowledge Village, Dubai Medical City, Dubai Design District and other conjoined locations have basically remained stable.
In a prominent trend, demand for flexible space options such as serviced offices and co-working spaces has grown as companies look to reduce their capital expenditures and new market entrants look to set up operations in the city. As a result, most of Dubai’s prominent flexible space operators have recorded high occupancy rates, with a few players reporting 100%, with plans to further expand their services in the emirate. – arab trade news agency
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