Following the repressed results at the beginning of 2017, Dubai's office sector kept displaying minimal momentum in the second quarter midst of falling stock prices, low oil prices and uncertainties in the region.
In the first half of the year, there wasn't much of a change in demand and activity from occupiers in comparison with the second half of 2016, however, the market still substantiated high levels of activity from office users reviewing various options, considering relocating their headquarters, or reducing their footprint by increasing efficiency.
Even though there was a drop in enquiries during the holy month of Ramadan, industry experts who are tracking the sector mentioned that they witnessed an increase in office enquiry numbers in the previous period, which is a positive sign for the quiet summer months in the United Arab Emirates.
When it comes to performance, grade A projects under single ownership in the DIFC (Dubai International Financial Center) and on Sheikh Zayed road did well. Managing director of Asteco, John Stevens, mentioned that office rental rates in Dubai Silicon Oasis and Dubai Investment Park remained flat, mostly due to limited activity in those locations. Stevens also mentioned that there was a drop of 3 percent on Sheikh Zayed road in the quarter reports, while Bur Dubai, Business Bay and Barsha Heights were all subjected to a 5 percent drop in rents.
Health care and pharmaceutical organizations were some of the key drivers of demand in the first half of the year, with an increased movement being noticed from engineering and architectural companies as well.
Seeing as Expo 2020 is coming up, a large number of international companies is expected to start business relocation in the largest UAE emirate which should help overcome the macroeconomic environment in Dubai.
Industry trackers noted that fallen oil prices in the UAE have caused various businesses to either downsize or consolidate their operations, leaving a noticeable level of vacancies in the Dubai market.
Dubai's expanding infrastructure and landscape are set to provide support for office space demand in the near future, with an expected increase in demand for commercial spaces in and around Dubai South due to the expansion of Al Maktoum International Airport and the Dubai Metro Red line.