The number of lease renewals at reduced rents is three times higher in Dubai than it was at the bottom of the last market trough in 2012, according to the managing director of CBRE Middle East.
Preliminary findings from CBRE research expected to be published in May indicates that landlords are increasingly flexible on lease renewal terms as they seek to retain existing tenants rather than risk having their properties empty, Nicholas Maclean told Arabian Business in an exclusive interview.
The trend reflects an ongoing market slowdown, he said. “There is still some uncertainty in the marketplace and we do not see that the market has bottomed out.”
His comments are backed up by fresh statistics from a CBRE report published on Sunday that reveals Dubai’s residential market contracted during the first quarter of 2017, with rental rates falling by an average of 1 percent quarter-on-quarter over the period.
Maclean said: “Levels of lease renewals at reduced rents are on the up – we estimate they are at the highest level they have been since mid-2012 – reflecting the ongoing shift in favour of tenants, as landlords view any tenant as better than nothing.
“However, there does appear to be increased confidence in the economy this year compared to in March 2016.”
He said this has had a positive knock-on impact on the prime commercial real estate segment in particular. A host of international occupiers have active requirements in the market at present, he said, while there has been a “quiet migration” of companies from other parts of the GCC to Dubai and Abu Dhabi.
“Organisations with a presence in more than one Gulf state are seeking to consolidate their operations into one location – the UAE – due to the comparative depth of the labour pool, ease of recruitment opportunities and quality of accommodation,” Maclean said.