Real estate firm sees few signs of Dubai rebound
Office leasing rates tumbled 57 percent in the fourth quarter from their level the previous year, according to the property company. It estimates some brand new office buildings stand more than 30 percent empty.
"There was a correction due because prices had become unsustainable," Nicholas Maclean, CB Richard Ellis managing director for the Middle East, said in an interview. "The speed has been the thing that caught people out, principally because of the Dubai market's dependence on international tenants."
To cope with the glut, landlords have begun offering tenants rent-free periods and more flexible payment terms, among other perks.
The situation is likely to get worse before it improves as more buildings open up, said JP Grobbelaar, director of research and advisory for real estate consultancy Colliers International in Dubai. He said the supply of office space is expected to double over the next two to three years.
"These are buildings that are currently under construction. We're talking about buildings coming out of the ground," he said. "We just don't see where the demand for that sort of supply is going to come from, not unless the economy grows hugely."
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The HinduCB Richard Ellis' figures show residential property prices also fell sharply, with rental rates down about 40 percent over the previous year. Real Estate Firm Sees Few Signs of Dubai ReboundDubai residential rent rates down 41%Dubai Rental Rates Plummet in Q4 -all 121 news articles »
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