The commercial real estate sector in Dubai has been sluggish over the last 6 months. However, the Emirates Towers Business Park, which has recently been announced, is expected to become the signature commercial development over the last decade in the Emirate as per leading realty experts. This development will lead to the size of the Dubai International Financial Centre (DIFC) being tripled by the year 2024.
This will also offer major relief for the steadily declining supply of Grade-A office space in the zone. Several new projects are being announced in the second half of 2017 for central Dubai and the Emirates Towers Business Park will be located near the Dubai financial district and will cost around $1.36 billion. The project will cater to growing demand for Grade-A office space through high-rise and low-rise office towers. Dubai is evolving swiftly from being a major regional hub for business towards becoming a global hub. The new Emirates Towers Business Park is also expected to be a good follow-up to the DIFC, expanding the overall financial district and putting Dubai at par with Wall Street in New York or The City in London.
The Emirates Towers Business Park will put meet demand around the Precinct, Gate and Village zones. Global occupiers already fork out higher rent per sq. ft. as compared to any other commercial building located in Dubai within the Emirates Towers office building. Deira was the micro market that performed the worst during the first 6 months of the year and lower limit rents went down by Dh10 per sq. ft. to stand at Dh50 per sq. ft. at the end of June, 2017.
The rentals in the core DIFC zone are the costliest in the entire city with close to 100% occupancy levels. The big prestige aspect combined with the allure of functioning in a globally regulated free zone means that the DIFC’s appeal has been kept intact. The Business Bay area in Dubai witnessed growth in upper limit rentals by Dh20 per sq. ft. and it was the strongest performer in the Dubai office market for 2017’s second quarter.
The increase in rents in the Business Bay zone has been spurred by the growing shortage of Grade-A stock in the zone. A-quality stock in the zone now remains limited to just a few buildings, which have been completed like the Ubora Tower, which has a vacancy rate just below 20%. The Tecom free zones located in New Dubai are situated away from Central and Old Dubai and these are major attractions for several new entrants into the commercial market in the city. Upper limit rents inclusive of service charges have gone up by close to 5% across Media City, Internet City and Dubai Knowledge Park.
The Innovation Hub spread over 1 million sq. ft. has already been fast tracked and is expected to be finished by late-2018 or early-2019. However, a majority of this building is expected to be pre-let and the upward pressure on rentals should remain the same.