Dubai Office Rent Increase Rate Surpasses New York and London

ICD Brookfield Place (Photo by Foster and Partners)

[Asia Economy Reporter Yujin Cho] Office rental prices in Dubai, United Arab Emirates (UAE), are rising faster than in major global business hubs such as New York, USA, and London, UK, Bloomberg reported on the 6th (local time).

Dubai's real estate market experienced a prolonged slump due to the direct impacts of the 2008 global financial crisis and the 2014 oil price crash, but it rebounded for the first time in six years since 2016.

The report stated, "Office rental prices in Dubai are rebounding for the first time in six years," attributing this to the increasing number of global banks and companies choosing Dubai as a financial hub.

According to the US real estate consulting firm CBRE, office rents in prime areas of downtown Dubai rose by an average of over 7% in the second quarter of this year.

During the same period, office rents in prime areas of London increased by only 1.4%, while New York recorded a rise of less than 3%.

The building with the steepest rent increase is the IDC Brookfield Place. This high-rise building, developed with the participation of IDC, an investment authority owned by the Dubai government, began construction shortly after the global financial crisis and opened in 2018.

After a long period of market stagnation that left vacancies unresolved, recent demand has led to 90% occupancy of the entire office space. Bloomberg also reported that there is a long waiting list as companies continue to inquire about moving in.

The vitality of Dubai's commercial real estate market is understood to be the result of a successful corporate attraction strategy specializing in financial investment and information technology (IT) sectors, rather than relying on the energy industry.

The report noted, "Numerous global banks and IT companies are choosing Dubai as a forward base for expanding their Middle East operations." In fact, many IT companies, including global banks like UBS and the Israel-based fintech company Rapid, headquartered in London, have moved in.

Bloomberg also reported that Dubai is becoming a hub for the hedge fund industry with the entry of major US hedge funds such as Millennium and ExodusPoint.

Dubai is also seeing a faster return of employees to offices following recovery from COVID-19. According to the UK real estate services firm Savills, Emirates Airlines, headquartered in Dubai, has an 80% office return rate among employees, whereas London City Airport's rate is less than 40%.

This content was produced with the assistance of AI translation services.