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Dubai prime office rents soar by 20% as vacancies fall

Rental values for prime office space in Dubai soared by 20 percent in the first quarter of 2016 compared to the year-earlier period, according to a new report by real estate firm JLL.

The JLL Global Office Index showed that Dubai was the top performer in the Middle East and North Africa region, with falling vacancies in Dubai International Financial Centre (DIFC) helping to drive up rental values.

It added that the performance of the DIFC was not, however, representative of the wider market, where relatively high vacancy rates have constrained rental growth.

The index also showed that Abu Dhabi and Jeddah rents rose by 5.3 percent while rents elsewhere in the region remained mainly stable.

Regionally, the MENA Index rose by 2.7 percent over the quarter, pushing the annual increase for Q1 to 11.9 percent, reflecting the demand for space in the best quality buildings.

Globally, JLL said that despite heightened financial market volatility and global economic uncertainty leading to a slightly more subdued picture for global office demand during Q1, supply shortages and limited new deliveries have kept the leasing environment highly competitive in many of the world’s dominant office markets.

Rents on prime office assets across the 95 major markets covered by the JLL Global Office Index rose by 3.6 percent year-on-year in Q1, the fastest annual pace of growth in four years.

JLL said that with the world’s major real estate markets appearing to be back on track following a cautious start to the year, business sentiment is improving and corporate activity is expected to ramp up over the course of 2016, with leasing volumes projected to broadly match those of 2015 and some upside potential of up to 5 percent.

The MENA Index is calculated from the change in headline face rents for the highest-quality space in the premier office submarket in five cities, weighted on the basis of the total office stock in each city’s overall market.

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