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Flexibility in conducting business and world-class infrastructure have prompted many of the companies to rent office space in free zones in the UAE.
According to the latest market trends in the office rental market released by CBRE, occupancy rates in office space in free zone areas managed by the Dubai International Financial Centre (DIFC), Jebel Ali Free Zone Authority (JAFZA), Tecom and Dubai Airport Free Zone Authority (DAFZA) are on an upswing.
As per CBRE’s figures for the third quarter of 2014, vacancy rates in these free zones are less than 5 per cent.
Buildings owned and managed by DIFC like The Gate have high occupancy. But some of the buildings which come under the DIFC free zone but are not owned by DIFC are also attractive destinations.
The rentals in these buildings, like the Burj Daman and Index Tower, are 25 to 30 per cent less than The Gate.
Almost 500,000 square meters of office space are expected to hit the Dubai market by the end of this year, with Business Bay emerging as the most popular secondary location contributing 30 per cent of this new stock.
In Abu Dhabi, real estate companies are anticipating a huge demand for office space once Sowwah Square on Al Maryah Island is notified as a financial free zone.
At the moment, there is huge demand for Grade A office space in locations like the Capital Tower at Capital Centre, the World Trade Centre Office Tower and Landmark Tower in Corniche.
Even office addresses on Khalifa Street, Hamdan Street, Salam Street and the Tourist Club Area are high on the wish list. The average annual rental rate for Grade A office space in Abu Dhabi hovers around Dh1,640 per square meter.
• There is more demand for office space located in free zones
• Business Bay is expected to release new supply of office stock
• Abu Dhabi’s Sowwah Square is awaiting free zone notification
Source: S. Dhar, Special to Properties
The writer is a freelancer