The demand for commercial space in the United Arab Emirates dropped for the ninth consecutive quarter in the last three months of 2017 . There have been a marginal decline seen in office rentals, but there is a steeper deterioration affecting industrial and retail space.
Leasable space continues to increase, so does the value of the incentive packages offered to tenants despite the fall in demand. Respondents also expect headline rents to drop by 2.7 per cent over the next 12 months, with rents expected to decrease across all areas of the market, according to the United Kingdom’s Royal Institution of Chartered Surveyors (RICS) latest global commercial property survey.
In spite of these downbeat forecasts, during the Q4 of 2017 the Occupier Sentiment Index moved to -36 from -49 in Q3, which point out a steady progress, with the average three year rental projection being comparatively upbeat.
Momentum worsened further in the United Arab Emirates’ investment market, especially with a fall to -38 from -28 of the Investment Sentiment Index. The enquiries on investment continued to get worse, with the steepest drop in demand from foreign investors seen across the industrial sector.
According to 53 per cent of respondents to the survey of the Royal Institution of Chartered Surveyors, the current property cycle in the United Arab Emirates is “in a downturn”; whereas thirty-five per cent of those surveyed are certain it is “approaching” the bottom.
The Royal Institution of Chartered Surveyors (RICS) said in a statement that the actual performance of property in the United Arab Emirates has been hitherto rather more resilient than its peers in the region because of the more diversified nature of the economy.
Investors elsewhere continue to find the English capital London attractive, in spite of it being seen as “expensive”, with about sixty per cent of respondents seeing the property cycle there in a downturn stage. But then again, investors are increasingly positive that London can withstand these elevated levels, which is proved by the continued interest from overseas buyers.
The United Kingdom’s Royal Institution of Chartered Surveyors (RICS) also said that in addition to London, other well established markets in the continent such as Amsterdam, Berlin, Frankfurt and Madrid continue to be the most attractive to both investors and tenants.