Rents fall in DIFC

Still, as a prime business hub in the centre of Dubai, commercial rents are faring better at DIFC than in other areas of the emirate.

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Commercial rents at the Dubai International Finance Centre (DIFC) have fallen 40 per cent in the past six months, a report by the property consultancy CB Richard Ellis (CBRE) said. They have declined from a peak of Dh750 (US$204) a square foot to Dh450 a square foot, with some private landlords offering further reductions, the report said. But commercial rents are faring better at DIFC, a prime business centre in the heart of Dubai, than in other areas of the emirate, with some firms having waited two years or more for office space within the centre, said Matthew Green, the associate director of research for CBRE. "The DIFC is in a prime location, has excellent facilities and high-quality office space, which generates considerable demand," Mr Green said. "This was made apparent by the lengthy waiting list for space in 2008 and the consistent level of demand that has been seen since opening in 2004." Demand in the DIFC is expected to be sustained as firms look for quality offices that are close to Sheikh Zayed Road. "The market has been driven by financial sector firms over the last 12 months. They want to be close to the DIFC," said Nicholas Maclean, the managing director of CBRE. "There is going to be a clear disadvantage for schemes that are a long way out from Sheikh Zayed Road." Nobody from the DIFC was available for comment. Mr Maclean said that Emaar Square, a business district at Downtown Burj Dubai, was also generating demand, while Business Bay would prove popular as office buildings come on stream. Both projects are on Sheikh Zayed Road. "In due course there will be strong competition from the World Trade Centre, but it becomes much more difficult the further away you get from that end of Dubai," he said. This month, CBRE reported that prime office rents in Dubai fell by about 18 per cent in the first quarter of this year compared with the final quarter of last year, dropping from an average of Dh550 a square foot to Dh450 a square foot. The areas that have been most affected by the declines in occupancy and lease rates are Jumeirah Lake Towers and "Site C", an area developed by TECOM close to The Greens. Landlords in areas further away from the business districts are offering incentives that include more relaxed payment terms, both quarterly and bi-monthly.