Office rents in Dubai and Abu Dhabi softened in the first quarter of 2018 despite an uptick in demand activity, and are projected to continue the downward trend for the rest of this year, according to a report from real estate consultancy Knight Frank.
Average rents across Dubai fell by 4.3 per cent year-on-year during the quarter, with 'Grade A' offices (adjacent to the city centre, with rents on average than the rest) falling by a steeper 7.4 per cent, while average Grade A rents in Abu Dhabi fell by 8.2 per cent, Knight Frank’s first-quarter market update showed.
“After subdued market performance in 2017, landlords have conceded to lowering rents and offering appealing incentives, and as a result leasing rates have exhibited significant falls in the first quarter across all market sectors,” the report said.
The UAE’s property industry faced numerous headwinds in 2017, including low oil prices, a fight for affordability by budget-conscious residents and widespread corporate consolidation, which led to shrinking office and housing requirements and prompted landlords to lower rents, creating a ‘tenant’s market’.
Due to market conditions, landlords will keep having to work harder to attract and retain tenants for the rest of 2018, Knight Frank’s report said. In particular, landlords marketing ‘shell-and-core’ (non-fitted out) offices must be willing to provide capital expenditure incentives and consider active asset management and lease re-gears to retain tenants, it said.
“Although we have seen a strong start to the year, we envisage that market activity will begin to slow in the second quarter of 2018, with rents likely to remain under some pressure,” said Taimur Khan, senior analyst at Knight Frank.
The report highlighted stark differences between different office sub-segments across Dubai and Abu Dhabi. 'Prime' office rents (the top 5 per cent of all lettings in the market) in both emirates declined at a slower rate than for Grade A or lower-grade ‘citywide’ space, at -1.6 per cent year-on-year in Abu Dhabi and -1.4 per cent in Dubai. Meanwhile, citywide office rents in Dubai fell 6.2 per cent in the first quarter of 2018, and by 12.9 per cent in Abu Dhabi.
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Similarly, vacancy rates in core prime assets remains as low as 1 per cent in Dubai’s DIFC Gate Village but rose on the edges of, and beyond, prime areas, the report added.
Despite ongoing rental declines, there were tentative signs of renewed activity in Abu Dhabi’s occupier market, as businesses took advantage of favourable market conditions. More than 50 per cent of demand in the quarter came from general trading companies, according to Knight Frank, followed by professional services, hospitality and other firms, such as education institutes, resulting in a “relatively stable” overall vacancy rate of 23 per cent.
“This demand pool represents a clear expansion from the demand pool witnessed in 2017 where enquiries were limited to only a select few sectors,” said Mr Khan. “Over the course of the first quarter we have also seen higher levels of demand for larger floor areas and a healthy level of demand for low to mid-sized office space [in the 100-500 square metre range].”
Dubai, meanwhile, saw “fragmented” market performance, with single-ownership assets continuing to outperform the market while strata-owned stock fared worse. Market-wide vacancy in Dubai in the quarter recorded a small uptick to 15 per cent, attributed to availability of new stock and corporate consolidation, the report said.
In Abu Dhabi, more than 195,000 square metres of office stock is scheduled to be delivered in 2018. However, Knight Frank said in reality only around 70,000 square metres would be delivered with the remainder likely to be pushed into 2019.
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
The specs: 2018 BMW R nineT Scrambler
Price, base / as tested Dh57,000
Engine 1,170cc air/oil-cooled flat twin four-stroke engine
Transmission Six-speed gearbox
Power 110hp) @ 7,750rpm
Torque 116Nm @ 6,000rpm
Fuel economy, combined 5.3L / 100km
yallacompare profile
Date of launch: 2014
Founder: Jon Richards, founder and chief executive; Samer Chebab, co-founder and chief operating officer, and Jonathan Rawlings, co-founder and chief financial officer
Based: Media City, Dubai
Sector: Financial services
Size: 120 employees
Investors: 2014: $500,000 in a seed round led by Mulverhill Associates; 2015: $3m in Series A funding led by STC Ventures (managed by Iris Capital), Wamda and Dubai Silicon Oasis Authority; 2019: $8m in Series B funding with the same investors as Series A along with Precinct Partners, Saned and Argo Ventures (the VC arm of multinational insurer Argo Group)
If you go
Flights
Emirates flies from Dubai to Phnom Penh with a stop in Yangon from Dh3,075, and Etihad flies from Abu Dhabi to Phnom Penh with its partner Bangkok Airlines from Dh2,763. These trips take about nine hours each and both include taxes. From there, a road transfer takes at least four hours; airlines including KC Airlines (www.kcairlines.com) offer quick connecting flights from Phnom Penh to Sihanoukville from about $100 (Dh367) return including taxes. Air Asia, Malindo Air and Malaysian Airlines fly direct from Kuala Lumpur to Sihanoukville from $54 each way. Next year, direct flights are due to launch between Bangkok and Sihanoukville, which will cut the journey time by a third.
The stay
Rooms at Alila Villas Koh Russey (www.alilahotels.com/ kohrussey) cost from $385 per night including taxes.
UAE currency: the story behind the money in your pockets
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, Leon.
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
Messi at the Copa America
2007 – lost 3-0 to Brazil in the final
2011 – lost to Uruguay on penalties in the quarter-finals
2015 – lost to Chile on penalties in the final
2016 – lost to Chile on penalties in the final
2025 Fifa Club World Cup groups
Group A: Palmeiras, Porto, Al Ahly, Inter Miami.
Group B: Paris Saint-Germain, Atletico Madrid, Botafogo, Seattle.
Group C: Bayern Munich, Auckland City, Boca Juniors, Benfica.
Group D: Flamengo, ES Tunis, Chelsea, (Leon banned).
Group E: River Plate, Urawa, Monterrey, Inter Milan.
Group F: Fluminense, Borussia Dortmund, Ulsan, Mamelodi Sundowns.
Group G: Manchester City, Wydad, Al Ain, Juventus.
Group H: Real Madrid, Al Hilal, Pachuca, Salzburg.
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The Penguin
Starring: Colin Farrell, Cristin Milioti, Rhenzy Feliz
Creator: Lauren LeFranc
Rating: 4/5
UPI facts
More than 2.2 million Indian tourists arrived in UAE in 2023
More than 3.5 million Indians reside in UAE
Indian tourists can make purchases in UAE using rupee accounts in India through QR-code-based UPI real-time payment systems
Indian residents in UAE can use their non-resident NRO and NRE accounts held in Indian banks linked to a UAE mobile number for UPI transactions
Skewed figures
In the village of Mevagissey in southwest England the housing stock has doubled in the last century while the number of residents is half the historic high. The village's Neighbourhood Development Plan states that 26% of homes are holiday retreats. Prices are high, averaging around £300,000, £50,000 more than the Cornish average of £250,000. The local average wage is £15,458.
NO OTHER LAND
Director: Basel Adra, Yuval Abraham, Rachel Szor, Hamdan Ballal
Stars: Basel Adra, Yuval Abraham
Rating: 3.5/5
What drives subscription retailing?
Once the domain of newspaper home deliveries, subscription model retailing has combined with e-commerce to permeate myriad products and services.
The concept has grown tremendously around the world and is forecast to thrive further, according to UnivDatos Market Insights’ report on recent and predicted trends in the sector.
The global subscription e-commerce market was valued at $13.2 billion (Dh48.5bn) in 2018. It is forecast to touch $478.2bn in 2025, and include the entertainment, fitness, food, cosmetics, baby care and fashion sectors.
The report says subscription-based services currently constitute “a small trend within e-commerce”. The US hosts almost 70 per cent of recurring plan firms, including leaders Dollar Shave Club, Hello Fresh and Netflix. Walmart and Sephora are among longer established retailers entering the space.
UnivDatos cites younger and affluent urbanites as prime subscription targets, with women currently the largest share of end-users.
That’s expected to remain unchanged until 2025, when women will represent a $246.6bn market share, owing to increasing numbers of start-ups targeting women.
Personal care and beauty occupy the largest chunk of the worldwide subscription e-commerce market, with changing lifestyles, work schedules, customisation and convenience among the chief future drivers.
Dubai Rugby Sevens, December 5 -7
World Sevens Series Pools
A – Fiji, France, Argentina, Japan
B – United States, Australia, Scotland, Ireland
C – New Zealand, Samoa, Canada, Wales
D – South Africa, England, Spain, Kenya
MATCH INFO
Manchester United v Manchester City, Wednesday, 11pm (UAE)
Match is on BeIN Sports
