Recent reforms in the real estate sector will boost Dubai’s appeal in the long run to a larger cohort of firms that are looking to open and expand operations across the Middle East, Knight Frank said in a report on the emirate’s office market on Wednesday.
“Given regulatory changes such as the introduction of dual licensing and the 100 percent foreign ownership law, which permits 122 activities across 13 sectors for 100 percent foreign ownership, alongside subdued demand, we expect rents will continue to fall over the short to medium term,” Taimur Khan, Associate Partner at Knight Frank said in the report.
The real estate consultancy firm also sees the changes driving further consolidation in the market, as firms “optimize” their portfolios in the UAE Free Zones offering dual licensing are likely to benefit the most from these changes, the report added.
Meanwhile, Knight Frank noted that the private sector is expected to see growth in the coming year.
“Firms remain cautiously optimistic in their outlook with 60 percent of firms expecting their output to be higher in a year’s time,” the report said.
Last month, Dubai said it would establish a Higher Real Estate Planning Committee to manage its real estate supply and demand. The emirate’s real estate market has recently experienced an extended period of oversupply and falling prices.
Citywide office rents fell by 9.2 percent in the 12 months to September 2019, according to the report.
“Whilst in the short run there are negatives for landlords due to these regulatory changes, in the long run these changes will attract new occupiers and provide a better regulatory platform for existing occupiers to expand from,” the report said.
A considerable level of supply is set to enter the market, said Knight Frank, which expects almost 793,000 square meters of office space to be delivered by 2021.