The cost of renting and operating an office in Dubai is getting cheaper when compared with other global markets, a study has revealed.
According to a survey by the property broker CBRE, the city has fallen two places in its rankings of the world's most expensive office markets over the past six months to become the world's 25th most expensive office location.
The study found that on average companies in Dubai this month spent US$92.57 a square foot on their offices, an increase of 0.01 per cent - or one US cent - on the last survey compiled in December.
With office rents rising by an average of 1.4 per cent in other global cities, Dubai is now cheaper as an office location than both downtown Boston, where annual costs reached $93.75 a sq ft and central Seoul, where they come in at $93.69.
Rents in Dubai rose dramatically during the boom years. In 2008 CBRE reported Dubai was the sixth most expensive office location in the world with an average annual office rent of $156.53 per sq ft.
The global financial crisis hit the city hard with rents falling by a third over the past four years and almost a third of the city's office stock left empty.
But since the start of the year brokers have called the bottom of the market and are reporting slight increases in rents.
"The market here is much more affordable to occupiers than it was back in 2008, which is making it more attractive," said Matthew Green, the head of research at CBRE Middle East. "Despite a high headline vacancy rate, the availability of quality accommodation within prime areas of the city is actually limited, with occupancy levels for the best quality assets often at 90 or 100 per cent." Local brokers also report that the number of firms taking space and inquiries from companies looking to take new space have also increased significantly over the year.
"We are seeing a significant number of expansions from global companies in Dubai this year," said Paula Walshe, the associate director for corporate client services at Cluttons in Dubai. "We have seen an increase of up to 40 per cent in inquiries this year compared with the last quarter of 2012.
"Across the region we have completed double the number of leasing transactions this year compared with the same period in 2012 - and 60 per cent of those transactions have taken place in Dubai," she added.
CBRE predicts that rents in Dubai will increase by 5 to 10 per cent over the next year as demand starts to increase, leaving Dubai around mid-table in its global ranking.
The survey found Dubai remains the most expensive office market in the Middle East and was the only city in the region to earn a place in CBRE's global top 50 ranking.
Hong Kong-Central topped the poll as the world's most expensive office location with annual overall occupancy costs of $235.23 per sq ft - a fall of 4.5 per cent on six months ago.
It was closely followed by London's West End, where annual occupancy costs rose 1.3 per cent over the last six months to $222.58.
They were followed by Beijing's Finance Street, Beijing's Jianguomen district and New Delhi's Connaught Place.
Although CBRE found that global office costs in the world's 50 most expensive cities increased by an average of 1.4 per cent, the survey found that this masked some significant increases in the Americas and Asia-Pacific offset by decreases in recession-hit Europe.
The cities with the highest increase in office costs were Jakarta, which experienced cost increases of 38.9 per cent over the past year and suburban Houston, Texas in the United States where costs increased 21.2 per cent.
