Commercial rents in Dubai are showing the first signs of levelling, but still remain higher than in Europe, Russia and the Middle East.
Prime rents - commercial rentals that are in line with international standards - were stagnant in the emirate in the fourth quarter of last year, according to the latest rents and yields survey by CB Richard Ellis (CBRE), an international commercial property services company.
The Dubai experience was in keeping with the property sector slowdown in the rest of the region.
Office rents in Dubai, at ?1,179 (Dh5,224) per square metre per year, were higher than 35 selected centres in Europe and Russia. Office rentals in the West End of London were the second-highest at ?1,117 per sq metre, followed by Moscow at ?1,097 per sq metre.
Average rental prices in Dubai last year rose 50 per cent for industrial buildings, 29 per cent for offices and 18 per cent for retail space.
"There is quite a big difference between Dubai [and the other countries] that comes down to the attractiveness to the international markets," said Nicholas Maclean, the managing director of CBRE Middle East. "Dubai has been the most successful in attracting international occupiers and is still seen as the first point of entry to do business in the Arab world. Abu Dhabi is catching up quickly, but is unable to provide what people want."
Prime rents in Dubai's retail segment, at ?1,072 per sq metre, by contrast, were among the cheapest compared with most European countries and Russia.
"One of the interesting things about how retail works here is quite different from almost everywhere else in the world," Mr Maclean said. "The retail market is controlled by trading families, some of which hold a franchise for 10, 20, maybe 50 brands.
"Therefore, in letting a mall we would speak to the family with the franchise rather than to the retailer directly. And their negotiating position [for rent] is much stronger than an average retailer in any European city."
Despite the loss of momentum in the commercial rental market, the survey found that investment yields in the fourth quarter remained unchanged. Dubai offers some of the highest prime yields in the region: 11 per cent in the industrial sector; 7.75 per cent in office; and 8 per cent in retail. Only the industrial segment showed any yield change during 2008, recording a 50 basis points increase, according to the report.
"When it comes down to demand and supply, we had a substantial demand over supply, particularly in the best locations along the Sheikh Zayed Road, DIFC, Burj Dubai," Mr Maclean said. "People have seen how buoyant the economy has been over the last few years and are prepared to pay high rents and make a decision quickly to be operational within Dubai."
Mr Maclean said that despite the downturn, the fundamentals of the property market were strong and there was still demand. "We have still clients coming and wanting to become operational within the region."
ngillet@thenational.ae
There has been a longstanding need from the Indian community to have a religious premises where they can practise their beliefs. Currently there is a very, very small temple in Bur Dubai and the community has outgrown this. So this will be a major temple and open to all denominations and a place should reflect India’s diversity.
It fits so well into the UAE’s own commitment to tolerance and pluralism and coming in the year of tolerance gives it that extra dimension.
What we will see on April 20 is the foundation ceremony and we expect a pretty broad cross section of the Indian community to be present, both from the UAE and abroad. The Hindu group that is building the temple will have their holiest leader attending – and we expect very senior representation from the leadership of the UAE.
When the designs were taken to the leadership, there were two clear options. There was a New Jersey model with a rectangular structure with the temple recessed inside so it was not too visible from the outside and another was the Neasden temple in London with the spires in its classical shape. And they said: look we said we wanted a temple so it should look like a temple. So this should be a classical style temple in all its glory.
It is beautifully located - 30 minutes outside of Abu Dhabi and barely 45 minutes to Dubai so it serves the needs of both communities.
This is going to be the big temple where I expect people to come from across the country at major festivals and occasions.
It is hugely important – it will take a couple of years to complete given the scale. It is going to be remarkable and will contribute something not just to the landscape in terms of visual architecture but also to the ethos. Here will be a real representation of UAE’s pluralism.
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National Bonds unveiled a Golden Pension Scheme in 2022 to help private-sector foreign employees with their financial planning.
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