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Greater flexibility is starting to emerge for offices in Dubai and at lease terms that budget-conscious businesses could settle for. That would be some respite for the spate of new businesses being set up locally or the newly created regional operations of overseas companies.
''The likes of JLT (Jumeirah Lakes Towers), Business Bay and Tecom C provide smaller companies with both free zone and onshore occupational opportunities in established business districts... but at a discount to single-owner Grade A [office] opportunities which set the benchmark for pricing,'' said Jon McGloin, commercial leasing manager at the consultancy Knight Frank. ''While there are always direct and indirect costs that need to be factored into starting a business, there remain plenty of value options in the market that can minimise the cost of leasing commercial premises.
''Strata-owned buildings in secondary areas within these districts remain fiercely competitive, but on the right lease, and with a pragmatic landlord approach, can provide tenants with short to medium term opportunities, benefiting both sides of the transaction.''
While Dubai’s residential space garnered enough momentum in the last three years and reduced the gap with the 2008 peaks significantly, the office side of the property market has been a relative late starter. Uncertain global economies saw limited scope for multinationals to expand. Much of the activity within the office space was coming from local businesses or local spin-offs of regional entities.
But, now, things are starting to perk up — ''We are seeing a variety of commercial requirements, both from new entrants into the market and from established tenants,'' said McGloin. ''Last year, the Dubai Department of Economic Development [is] reported to have issued 18,000 new trade licenses for onshore businesses.
''The majority of these requirements from new entrants tend to be from smaller businesses, or branches of regionally based firms looking to expand into the UAE for the first time. However, there also remains firm appetite from existing businesses with larger and established commercial footprints looking to expand and /or consolidate multiple offices into a single presence, by way of establishing the building blocks for a longer term future in the region.''
Those new licences could, at some point this year, should start making their presence felt. Another plus for the office property market as a whole is that developers are not rushing in with new massive office projects. Instead, some of them are looking to create low-density developments in locations slightly removed from the city. ''In this regard, Arjan in Dubailand has the potential for tenants looking at low- to mid-rise office buildings,'' said Samir Munshi, managing director at Orion Holding, which has picked up plots for mixed-use (office and retail) projects.
''Dubai Silicon Oasis has already seen tenant demand as options for affordable locations become a primary factor for many businesses.''
A new Knight Frank report which will be released on Monday states the case for office properties suited to all budgets. ''In Dubai... we expect strong demand from corporates, governments and embassies for secure rental accommodation to continue throughout the year,'' the report said. ''However, a renewed focus on cost means that it is important for firms, and individuals, to consider new, more affordable areas in order to stretch budgets further.''
Source: Manoj Nair, Associate Editor, gulfnews.com