Dubai, most preferred location for office space in Mena: JLL report

Global realty services firm JLL in its inaugural annual occupier sentiment survey for the Middle East and North Africa (Mena) has reaffirmed Dubai's position as the most sought-after market for office space in the Middle East. The report further adds that the UAE and Dubai in particular has been a key investment target for international investors because of its "safe haven" status in a volatile region.

Over the last four years, Dubai with its net absorption rate of 112,000 sq mtrs in its CBD has let more space than what has come on to the market every year. According to Dana Willamson, JLL's head of agency for the MENA region, the results of the survey have solidified Dubai's place as the preferred business and financial centre in the Mena region.

The key drivers responsible for reaffirming Dubai premier standing include the anticipated annual GDP growth in the UAE of approx 3 percent in 2015-2018, population growth of 2 percent and a labour force increase of 2 per cent. Multinational companies who participated in the survey said they planned to increase their workforce in the UAE by between 5-20 percent per year over the next 3-5 years.

Confirming the trend Sean McCauley, director of agency at property consultancy Asteco, asserted that the demand form MNCs for new office space had increased appreciably over the last two quarters in particular. He added that corporate majors had shown a preference for buildings with a single landlord citing better maintenance and ease of renewal negotiations.

He further stressed that the growth in the country's economy was also a key factor in driving growth at the low end of the Dubai market, with more individuals deciding to start their own business and rent small units, piquing the interest of serviced office providers.

However according to industry experts, despite this marked increase in demand, price sensitivity and an oversupply of office space remain key factors. Citing the example of multiple options with slight variation in the psf costs, they add that companies normally go for the cheapest available option, resulting in the landlords of such properties often finding it difficult to affect an increase in rents.