Challenging conditions prompt Dubai shift to smaller office space

Landlords in Dubai are dividing floors and offering smaller office space to attract tenants in response to more challenging market conditions, according to a new report.

In its Q3 Dubai Real Estate Market Overview, consultancy JLL said demand in the emirate’s office market had shifted to smaller units with “relatively few” large transactions during the quarter.

“This reflects occupiers’ caution in the face of more challenging economic conditions in both Dubai and across the broader region,” said Craig Plumb, head of research, JLL MENA. “While there remains strong demand for smaller units, it is taking far longer to negotiate larger deals as companies remain uncertain about their staffing and space requirements.”

JLL said Index Tower in DIFC, which has divided four floors into smaller units offering 50, 150 and 300 square-metre spaces for lease, was an example of this new trend.

While in the wider market it said conditions remained “muted” based on the lack of new projects at the annual Cityscape Global conference last month.

Read: The Dubai property barometer – Is it up or down?

“We’ve seen a lot of projects being re-announced and fewer new projects being launched compared with previous years. While short-term sentiment remains soft, most developers and investors are expecting conditions to improve over the medium term, with an increase in activity anticipated in the lead up to Expo 2020.”

Office rents remained largely unchanged during the quarter with a 2 per cent increase noted year-on-year.