DUBAI ANNUAL MARKET UPDATE 2020/2021 - CORE Research core-me.com/research - CORE Real Estate Dubai
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CORE Research
core-me.com/research
DUBAI
ANNUAL
MARKET
UPDATE
2020/2021
FOREWORD
MARKET SNAPSHOT
2020/2021
record transaction volumes seen, largely led by end-
COVID-19 was a black swan event that user buyers. As an additional measure, we believe a
brought unprecedented challenges and lowering of DLD transfer fees could potentially help
dominated all our conversations, business transaction activity by further reducing total buying
practices and occupier behaviour over 2020 costs.
and its impact is expected to continue in
2021. However, Dubai outperformed most Although the impact of COVID-19 has pushed
global cities as the UAE’s government is one price recovery further ahead, we are starting to
of the most efficient and agile leaderships see resilience in the market as sales prices reach
in the world, with a history of successfully development costs in many districts. Villa districts
have particularly fared well due to rising demand
navigating through regional and global
from occupiers requiring more space and open
challenges. The government’s efficient areas as they adjusted to changes in working
measures to mitigate the impact of COVID-19 arrangements. However, apartment districts maintain
while maintaining business continuity, their downward trajectory and are yet to show signs
providing multiple stimulus packages to aid of plateauing.
the economy and most importantly the recent
availability of vaccines has bolstered market The office market continues to face headwinds
sentiment and paved the way for a stronger with occupancy levels and rents remaining under
2021. downward pressure as existing supply issues and
dampened new demand impact office absorption.
Most new demand in 2020 stemmed from relocation
Although still not par with pre-COVID levels, we activity, particularly from SMEs and regional
have seen green shoots appear in the tourism, occupiers as most businesses adapted to market
retail and hospitality industries over Q4 2020 with conditions. International corporates on the other
an active winter season and the fact that Dubai is hand are largely continuing to work from home
one of the few places globally that is relatively safe, with their real estate decisions deferred to Q2 2021
well connected and open to tourism, resulting in an subject to the wider public being vaccinated. We
influx of visitors. Furthermore, the UAE government expect a second wave of relocations in 2021 when
signing landmark peace accords and building large corporates inevitably adjust their workplace
diplomatic ties with Israel and Qatar is also expected strategies.
to boost regional stability and business sentiment.
With strong fundamentals and renewed business
While disrupting the real estate market, the resilience, we expect 2021 to be the definitive
pandemic has also accelerated reforms. Measures year that Dubai has been preparing for years as
to curb supply are gradually showing effect with we welcome the world for Expo 2020. With signs
major stakeholders collectively addressing Dubai’s of gradual revival seen across sectors, we remain
oversupply concerns. cautiously optimistic for a stronger 2021 on the
back of efficient governments measures mitigating
Furthermore, government-led demand drivers the pandemic’s impact, easing in global travel
including a range of visa reforms, low-interest rates restrictions, vaccinations for the wider public and
and attractive LTV ratios for first-time buyers are the positive impact created by the Expo 2020 on the
supporting and sustaining demand. These steps are overall market.
also resulting in a slowdown in the off-plan market
and relative resilience in the ready sales market with
This publication
This document was published in January 2021. The data used in the charts and tables is the latest available at
the time of going to press. Sources are included for all the charts. We have used a standard set of notes and
abbreviations throughout the document.
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Residential Market 4 core-me.com/research core-me.com/research 5
DUBAI ANNUAL MARKET UPDATE 2020 - 2021
RESIDENTIAL SUPPLY
Supply Delivered by Area 2020 Supply Delivered by Developers - 2020
Dubai Marina, 2% Bur Dubai, 2%
Select Group, 1% G&Co, 1%
Dubai Creek Harbour, 2%
Tiger Real Estate, 1%
Muhaisanah, 2%
Others, 13% Dubai South, 1%
Dubai Sports Al Wasl, 2%
City, 3% Others, 39%
Dubai saw nearly 36,000 units come to market over South, Merano Towers by Damac in Business Bay, Dubai Islamic
Downtown Bank, 2%
2020, bringing total residential stock to 586,000 BLVD Heights and Boulevard Point by Emaar in Dubai, 4% Danube, 2%
Dubai Silicon
units. While oversupply concerns remain, the Downtown Dubai, One JBR by Dubai Properties Oasis, 5%
Deyaar, 3%
realization rate contracted in 2020 compared to in Jumeirah Beach Residences while JLT also saw DIRC, 3%
our initial conservative forecasts of 49,000 units, Banyan Tree Residences delivered in 2020. Al Furjan, MAG, 3%
5%
partly due to the impact of COVID-19 on the overall
Dubailand, Azizi, 3%
supply chain and softening in demand. Although With many major developers announcing to 28%
lower in volume than initial estimates, this is still curb supply, we expect a slowdown in 2021
Business
a considerable volume being added to existing handovers with nominal new project launches. We Bay, 7% Dubai
Properties, 6%
unabsorbed inventory and we expect absorption to conservatively forecast nearly 39,000 units for 2021,
be relatively slower in the near term. however, further revisions are expected on supply
forecasts as they will inherently depend on buyer Dubai DAMAC, 8%
South, 7%
The most number of handovers over 2020 were confidence and an uptick in market sentiment as
seen in Dubailand (Townsquare, Mudon and Akoya developers continue to adjust to ongoing market EMAAR, 15%
Meydan & Nshama, 9%
Oxygen) followed by Jumeirah Village Circle, MBR conditions. Mohammad Bin Rashid City and Dubai JVC & MBR City, 8%
JVT, 12%
City and Dubai South. Emaar continues to be Creek Harbour are expected to receive the highest
the top developer by handover volumes in 2020 number of deliveries in 2021.
contributing nearly 15% of total stock, followed by Supply Forecast by Area 2021
Nshama at 9%, Damac at 8% and Dubai Properties
at 6%. Others, 19%
Major villa deliveries include Noor Townhouses by Villas Delivered Apartments
in 2020 Al Furjan, 2%
Nshama in Townsquare, Vardon and Pacifica by 30% 70%
Dubai Silicon Oasis, 3%
Damac in Akoya Oxygen, Casa Dora Villas by Dubai
MBR City, 20%
Properties in Dubailand, Maple 3 by Emaar in Dubai Dubai South, 4%
Hills Estate and Arabella 2 in Mudon.
Dubai Marina, 5%
Prominent apartment handovers in 2020 include
Rawda and Hayat Boulevard by Nshama in
586,000 units 36,000 units
Total residential stock in
Delivered in 2020
Townsquare, multiple deliveries by MAG in Dubai Dubai as of Q4 2020 Jumeirah Village Circle, 7%
Dubai Creek
Harbour, 14%
Residential Deliveries in Dubai 2011 - 2021 Downtown Dubai, 13%
40
Dubailand, 13%
35
Source: CORE Research
30
Number of units in thousands
25
32 36 39
20
28
15
19 18 18
18 17
10
12 11
5
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021E
Source: CORE Research
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DUBAI ANNUAL MARKET UPDATE 2020 - 2021
RESIDENTIAL Transaction Volumes
TRANSACTION
3000
2500
TRENDS 2000
Number of Units
1500
Despite a challenging 2020, we have seen
transaction activity in the ready sales market see 1000
an increase of 7% over 2019 volumes due to many
demand drivers such as attractive sale prices, lower
interest rates and increase in loan-to-value ratios 500
acting as a catalyst. The total buying costs are
the lowest than they have been in the more than 0
five years for a given unit, which is the one of the Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 Jul 20 Aug 20 Sep 20 Oct 20 Nov 20 Dec 20
biggest factors driving transaction volumes in recent
months. After the initial slump in transaction activity Ready Sales Market Transactions Off-plan Transactions
in April and May 2020 due to movement restrictions, Source: REIDIN, CORE Research
ready sales market monthly transaction volumes
have steadily risen since the restrictions were lifted
in June with December 2020 witnessing the highest contracted significantly by -32% year-on-year Although scaling back of new launches may not
monthly volumes in two years. It is interesting to despite heavily incentivised payment plans and have an immediate impact on price recovery due
note that this rise in transaction activity is despite a lower entry points as buyers preferred ready units to ample existing inventory, it is welcome news and
slowdown in international travel and buyer activity. to avoid further uncertainty and delays that may be will greatly help in aligning the supply and demand
We expect this momentum to continue over Q1 2021 expected from the off-plan market. We foresee this equilibrium of the overall market. We expect this
as the market is proving to have a sustained demand preference for ready stock to continue in 2021. decrease in new launches, if sustained over the mid-
for ready units driven by end-user demand. term, to also cause a slowdown on future off-plan
On the other hand, off-plan market activity In line with government directives and recent news market transactions volumes.
of many major developers holding on new project
launches, 2020 saw a sharp decline in new launches, Over 2020, Emaar led the tally in transactions with
dropping by 67% compared to 2019 as developers nearly 19% of all secondary market transactions and
Residential Sales Transactions Trends increasingly adjust to market conditions and focus over 26% of off-plan transactions being concluded in
on absorption of existing inventories. Emaar projects.
30000
25000
20000
15000
Number of transactions
10000
5000
0
2018 2019 2020 2018 2019 2020 2018 2019 2020
Ready Sales Market Transactions Off-plan Sales Transactions New Launches
Source: REIDIN, CORE Research
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DUBAI ANNUAL MARKET UPDATE 2020 - 2021
SALES MARKET
Apartment Sales Prices Q4 2019 vs. Q4 2020
The Dubai Discovery JLT Dubailand DIFC Jumeirah Business Dubai Downtown Palm
Greens Sports Gardens Village Bay Marina Dubai Jumeirah
& The City Circle
While ready sale transaction volumes are rising The government is implementing many demand Views
steadily, residential sales prices continue to follow a drivers to further aid transaction activity with easing
downward trajectory with almost all areas showing access to finance while taking strong measures
-4% -4%
reductions. While demand continues to grow, it is to attract and retain residents. The market is at -7%
-6%
being outstripped by unabsorbed inventory and historically low interest rates and favourable loan- -10% -11% -11%
-13%
new supply coming to the market. However, the to-value ratios with an increase of five percentage
-14%
villa market has displayed relative levels of resilience points for first-time buyers expected to improve -15% -15%
with lower year-on-year reduction in values due affordability in the ready sales mortgage market. -20%
to evolving occupier needs for more space and -23%
outdoor areas in the wake of COVID-19 supporting In addition to the long-term visa regulations -26%
demand. The Springs and The Meadows (+1%), announced in 2019, 2020 saw more reforms being
Arabian Ranches (-3%), Palm Jumeirah (-4%) and implemented such as the retirement visa and remote
-34% -35%
Jumeirah Park (-5%) were the most resilient villa working visa which are expected to create steady -35% -35%
districts with nominal changes in year-on-year sales demand as more resident expats and international -39% -39% -41% -40%
prices, bolstered by a strong Q4 transaction market buyers choose UAE to settle down and contribute to
performance. sustained population growth.
Year-on-Year % Change Change in Price Since Peak 2014
Apartment districts on the other hand continue to We expect these demand drivers and robust Source: CORE Research
see sharp declines, with only the prime apartment measures taken to mitigate the risks of COVID-19
districts such as Downtown Dubai (-4%), Palm coupled with a successful vaccine drive to positively
Jumeirah (-4%) and Dubai Marina (-6%) showing impact overall market sentiment and in-turn
relatively lower levels of change in annual prices. transaction volumes. We are also witnessing some
The more affordable and outer apartment districts tenants who have a long-term view, making a shift
such as Dubai Sports City (-14%), Discovery Gardens from renting to owning as a form of savings plan
(-15%) and Dubailand (-15%) have been the weakest due to attractive entry points and easy access to
performing districts over 2020. finance. Therefore, we forecast continued market
movement and steady transaction volumes,
Looking historically from the peak values of 2014, particularly for ready units, as many buyers are
villas have dropped nearly 31% while apartment actively looking for competitively priced assets in
districts have dropped over 35% with older districts the market.
such as JLT and Discovery Gardens witnessing over
a 40% drop over the last six years.
Villa Sales Prices Q4 2019 vs. Q4 2020
Emirates Palm The Dubailand Jumeirah The Springs Jumeirah Arabian
Hills Jumeirah Lakes Village and The Park Ranches
Circle Meadows
1%
-3%
-4% -5%
-7%
-12% -11%
-13%
-26%
-27%
-30%
-31%
-36% -36%
-38%
-40%
Year-on-Year % Change Change in Price Since Peak 2014
Source: CORE Research
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DUBAI ANNUAL MARKET UPDATE 2020 - 2021
RENTAL MARKET created the need for larger living and outdoor
spaces, particularly for families with children,
From peak rents witnessed in 2014, villas have
dropped nearly 33% while apartment districts have
as tenants accommodated work from home dropped over 40% with many districts displaying
arrangements. This trend has boosted demand for reductions over the 45% mark over the last six years.
Due to income contraction, repatriation and upon renewals to retain tenants. This has led a large many villa districts, in turn supporting rental values, As rents fall at a faster pace compared to sales
oversupply issues, rents continue to fall across the section of tenants remain in their current premises although it is to be seen if this trend is sustained as prices, yield contractions have been witnessed
majority of Dubai’s districts. Following a quiet Q2 as they have been able to achieve rental savings more people go back to physical offices over 2021. across villas and apartment districts. We witnessed
2020, Q3 and Q4 2020 saw significantly increased upon negotiations while avoiding uncertainty and both flexibility in headline rents and attractive
activity in the rental market as tenants adjusted additional moving costs. However, depending upon Looking at year on year data, rents in apartment payment/lease terms coupled with other incentives/
to their new financial reality. Most tenants either landlord flexibility, tenants’ working arrangements districts in general have fallen sharper than villa waivers as key differentiating factors for developers/
looked to find the current (albeit corrected) rental and financial situation, many have relocated to either districts with a higher share of apartment districts landlords in an attempt to preserve occupancy
value of their property to help them negotiate rent achieve more space or considerable savings as rents witnessing double-digit drops. The weakest levels.
reductions with their landlords or relocate and have softened markedly over the last 12 months, performing apartment areas are Dubai Sports City
reduce their rental outflow. particularly in the apartment districts. (-19%), Dubailand (-19%), The Greens and The Views Furthermore, efficient building and owner’s
(-17%), and JLT (-15%). Villa communities witnessing association management in relation to establishing
While landlords may push back on increasing Furthermore, tenants upgrading to bigger units the sharpest year-on-year declines are Jumeirah safety protocols in the wake of COVID-19 has helped
tenant demands, most landlords are now willing or moving from apartments to villas was a major Village Circle (-13%) followed by Reem-Mira and The developers and landlords provide comfort to tenants
to negotiate lower rents and flexible lease terms trend seen over 2020 as the aftermath of COVID-19 Villa in Dubailand (-11%). Prime villa locations like thus further aiding occupancy levels.
the Palm Jumeirah (-5%) and Emirates Hills (-4%)
have shown resilience in rental drops, particularly in With household incomes expected to remain under
Villa Rents Q4 2019 vs. Q4 2020 the upper end of the market with high absorption pressure, we foresee relocations to continue with a
witnessed over H2 2020 with now limited stock majority of tenants remaining price sensitive.
Dubailand The Springs Jumeirah The Arabian Jumeirah Palm Emirates
available in the market.
and The Village Lakes Ranches Park Jumeirah Hills
Meadows Circle
-4%
-5% -5%
-8%
-6% -6% Gross Residential Yields
-11% 7.7%
-13% 7.3% 7.2%
7.0% 7.0%
6.7% 6.4%
5.9%
5.5% 5.4% 5.2% 5.4%
5.1% 5.2%
-30%
-35% -34% -34%
-38%
-40% -40% 2014 2015 2016 2017 2018 2019 2020
-41%
Source: CORE Research Apartment Villa
Apartment Rents Q4 2019 vs. Q4 2020
Dubai Dubailand The Greens JLT Business Discovery Dubai Jumeirah DIFC Palm Downtown
Sports and The Bay Gardens Marina Village Jumeirah Dubai
City Views Circle
-9% -9%
-11%
-12%
-15% -14%
-15%
-17% -17%
-19% -19%
-36% -35% -35%
-37%
-40% -41%
-43% -43%
-45% -44%
-46%
Source: CORE Research Year-on-Year % Change Change in Price Since Peak 2014
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DUBAI ANNUAL MARKET UPDATE 2020 - 2021
2021 Residential
Market Forecast
Sales prices and rents to remain under downward pressure
Capital values and rents are expected to continue softening with apartment
districts facing further headwinds while established villa districts that saw
strong take-up over H2 2020 and currently have limited supply are expected to
see price resilience.
Flexibility in lease terms as market expected to largely remain
tenant friendly
As the market remains price sensitive, with most landlords willing to negotiate
to retain tenants, flexibility in lease and payment terms are expected to
continue.
Steady secondary sales transactions
Residential secondary sales transactions are expected to be steady as
underlying demand is supported by lower capital values and demand drivers
such as financial, visa and social reforms.
Lower new launch volumes
While the market continues to see significant handovers and unabsorbed
inventory with oversupply concerns persisting in the near term, new launch
volumes were at the lowest level in 2020 compared to the last 8 years. We
expect new launch volumes to further reduce in 2021 as developers re-
strategize and focus on absorption of existing inventory.
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Commercial Market 16 core-me.com/research core-me.com/research 17
DUBAI ANNUAL MARKET UPDATE 2020 - 2021
OFFICE SUPPLY Office Rental Market Performance
Mashreq Bank’s purpose-built Dubai Office Supply 2017 - 2022 Office rents over 2020 have been under pressure to undercut the market while single landlords are
headquarter in Downtown Dubai 3.50 across all the sixteen districts we track. However, being relatively resilient. This is because most strata
and ICD Brookfield Place in freezones with predominantly single owned office buildings have lower occupancy levels, making
DIFC were the two prominent assets such as DIFC, Dubai Internet City and Media landlords eager to attract and retain tenants
handovers of 2020, adding 3.00 City, DWTC and D3 have displayed relatively lower whereas single landlord buildings have typically
nearly 1.5 million sq. ft. of office levels of rental reductions partially due to rents witnessed higher occupancy levels and attracted
space and bringing the total 2.50
being controlled by single landlords. Old Dubai bigger corporates, a distinction they wish to
Dubai office stock to 104.9 locations such as Deira, Bur Dubai and Garhoud maintain. Single landlords, therefore, are hesitant to
million sq. ft. as of end of 2020. have seen the sharpest drops with average rents drop rents drastically while also wanting to minimize
GLA in Million sq. ft.
The office supply pipeline for 2.00 falling over 20 - 25% year-on-year as many tenants the impact on their valuations.
2021 is significantly lower than migrated to newer locations. Other strata districts
2.31
previous years with smaller office such Barsha Heights, Busines Bay and JLT continue While top and average rental ranges may still have
1.50
portfolios in mixed-use buildings to face challenges, displaying a steep 20% year-on- some room for contraction, bottom rental ranges
across Dubai expected to be 2.07 1.99
year drop in average rentals. are facing resistance for further rental reductions as
handed over. In 2022, phases of 1.00 they near operational costs for landlords, a scenario
large-scale projects such as the We have seen strata landlords, particularly those particularly being seen in districts with large levels
office portfolio of District 2020 1.56 with mortgaged units be very flexible and willing of strata stock.
1.28
and Uptown Tower (Uptown 0.50
2020) in DMCC are expected 0.68
to be handed over H2 2020. As Dubai Office Rents Q4 2020
-
with the residential market, we
400
expect lower realisation rates and 2017 2018 2019 2020E 2021E 2022E
potential delays to push these 350
Rents in AED/sq. ft./year
handover dates further. Built Expected 300
250
Dubai Office Market in Numbers 200
150
104.9 million sq. ft. 100
Total office stock 50
0
Downtown SZR (Trade SZR (1st D3 One DIFC DIC/ Barsha DIP JLT Business Bur DAFZA Deira Garhoud DHCC
34.3 million sq. ft. 70.6 million sq. ft. Dubai Center
to 1st
INTCHG
to 3rd
Central DMC/
KV
Heights Bay Dubai
Grade A office stock Grade B & C office stock INTCHG INTCHG)
Rental range Average rent AED / sq. ft.
Change in Average Office Rents Q4 2019 vs Q4 2020
250
200
Rents in AED/sq. ft./year
22% 25% 150
100
50
Average Grade A Office Grade B & C Office 0
Vacancy Levels Vacancy Levels Bur Barsha JLT Business Deira Garhoud SZR* Downtown DHCC DIC/DMC/ One D3 DIFC
Dubai Heights Bay Dubai KV Central
Source: CORE Research Source: CORE Research *Sheikh Zayed Road (refers to the stretch from Trade Centre to first interchange Q4 2019 Q4 2020
18 core-me.com/research core-me.com/research 19DUBAI ANNUAL MARKET UPDATE 2020 - 2021
Office Occupancy Levels Office Demand Trends
While demand and enquiry levels slowed cases, etc. Such stringent measures are generally
considerably over Q2 2020, we saw a significant missing in Grade B and Grade C buildings. As rents
spike over Q3 and Q4 2020 due to pent-up demand have softened across grades, the advantage of
and restructuring measures taken by many firms. moving into a Grade A building is multi-fold - from
As most new office demand over 2020 stemmed Total Office Occupied vs. Vacant Stock While Q4 is historically a busy period for office a financial as well as user experience and safety
from relocation or downsizing activity while new enquiries, Q4 2020 was busier than previous years perspective.
120
market entrants remain limited, occupancy levels and we expect this momentum to be continued over
contracted across the board and the net absorption in Q1 2021. Another emerging office trend is that of occupiers
continued to be negative. In addition to new office moving between freezones. With most freezone
Gross Leasable Area in Million Sq. ft.
100
deliveries, a significant amount of secondary market We have seen growing demand from technology office stock being largely single owned and at
19.8 19.5 24.6 25.2
stock has also been brought to market as firms’ re- clients who have witnessed a marked rise in business considerably higher rents, we have seen occupiers
structure their manpower and spatial requirements 80 activity as COVID-19 disrupted occupier behaviour consider more competitively priced strata freezones
in the wake of COVID-19, creating further downward and increased their market penetration. Most such as DMCC. Furthermore, we continue to see the
103.5
104.9
99.8
101.1
pressure on occupancy levels. 60
technology clients with healthy cashflows are in fact trend of old Dubai occupiers migrating to properties
looking to secure better commercial terms, longer located in Business Bay and Sheikh Zayed Road.
We have seen an increase in subleasing activity 80.0 81.6 78.9 79.7 lease terms and early break clauses. Landlords
by firms occupying purpose-built facilities such as 40 are also willing to provide the same as longer- The preference for fully fitted and partitioned
HSBC, Standard Chartered and tenants in DIFC. The lease terms helps limit vacancy levels across their offices or CAT-A finishes (finished ceiling and raised
trend for repurposing retail and other mixed-use portfolio. flooring) remains strong while shell and core stock
20
space into commercial space is also coming into has seen limited movement as potential tenants are
effect with offices at City Walk, Roof Top in Nakheel In the aftermath of the pandemic, most SMEs saw hesitant to invest in fit-outs and require immediate
Mall and Golden Mile on Palm Jumeirah being prime 0 the immediate business impact of COVID-19 and occupancy. This decision driver has led well priced,
examples. 2017 2018 2019 2020 were quick to restructure and adjust to market maintained, fully fitted units to witness good
conditions. This reduction of staff coupled with absorption, particularly in strata markets such as
Downtown Dubai and DIFC both saw the sharpest Approx. Occupied Stock Approx. Vacant Stock the need to lower office rents to reduce capital Business Bay and JLT.
decline in occupancy levels (-10% year-on-year) as expenditure led to a significant rise in office enquiry
new and secondary stock came to market. Older levels from this tenant segment with nearly 60% of Lastly, we have also seen many occupiers enquire
Dubai districts of Bur Dubai, Garhoud and Deira also Of the total 104.9 million sq. ft. of office stock, the demand in 2020 focused below the 2,000 sq. ft. and analyse the market and use this data to
saw a marked drop in occupancy levels, averaging nearly 25.2 million sq. ft. of stock is vacant (24% of area requirement. renegotiate with current landlords (who are being
around -10% year-on-year as tenants relocated to all Dubai office stock), with the volume of vacant extremely flexible to retain tenants) and remain in
newer areas such as Busines Bay and Sheikh Zayed stock gradually increasing over the last five years. This high concentration of enquiries below the 2,000 their present units. Most of these renegotiations
Road. That said, we have seen a polarizing performance sq. ft mark is also due to most large corporates and are for a one-year term as tenants are deferring
amongst Grade A and Grade B areas with most blue-chip occupiers continuing to work from home decision-making and not wanting to commit to
Overall vacancy levels across Grade A stock of the market witnessing a flight to quality with or deploying hybrid models of work from home and longer terms due to business uncertainty. In other
increased to over 22% as of Q4 2020 while Grade B Grade A areas typically witnessing resilience in both phased office occupancy. These large occupiers are instances where landlords were unable to meet
stock vacancy levels remained steady at 25%. occupancy levels and rental drops. yet to restructure with many deferring real estate tenants’ expectations has resulted in tenants moving
decisions to Q2 2021 subject to most of their staff out to more economical units.
being vaccinated while awaiting instructions from
their global headquarters. Many of these large multi-
Office Occupancy Q4 2019 vs. Q4 2020 nationals who are headquartered in the US or UK are Office Enquiries by Area
100% 18 also taking a company-wide approach on workplace
strategies and are thus slow to move back to Others
90% 7% Downtown
16 physical offices. Dubai, 2%
80% DIC/DMC/
14 KV, 3%
On the other hand, over Q4 2020, we saw an
District GLA in Million sq. ft.
70%
Barsha
12 increase in leasing enquiries from large local or JLT
Heights &
Al Qouz, 4%
60% regional occupiers as they gradually phase back 34%
Occupancy
DIFC
10 staff into physical offices. 6%
50%
8 Old Dubai (Bur
40% Office tenants are also becoming increasingly Dubai, Deira,
6 aware of the importance of building maintenance Garhoud)
30% 7%
and facilities management. Tenants are looking to
20% 4 move to superior managed and built properties to
bolster employee confidence and safety while not
10% 2 Sheikh Zayed
significantly altering cash outflows. Most Grade A Road, 11%
0% 0
buildings which are largely single owned have been
Downtown SZR* D3 DIFC DIC/ DAFZA Barsha JLT Business Bur Deira Garhoud DHCC proactive with better COVID -19 risk mitigation Business
Dubai DMC/ Heights Bay Dubai Bay, 26%
KV protocols such as visitor security, thermal screening,
Occupancy Q4 2019 Occupancy Q4 2020 District GLA in Million sq. ft. frequent cleaning and disinfecting measures and
Source: CORE Research building management protocols for COVID positive Source: CORE Research
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2021 Office Market Forecast
Office is here to stay
Although flexibility around remote working will remain prevalent with hybrid models
the largely accepted workplace strategy, the importance of the physical office is
unlikely to be diminished as businesses will need common spaces to foster innovation,
productivity, company culture and teamwork that are hard to sustain through remote
working.
Second wave of relocations
We expect a second wave of relocations in 2021 when global corporates inevitably
adjust their workplace strategies. Most of the demand for these relocations/
consolidations are expected in the Grade A market.
Resistance in headline rents
Landlords, particularly of single owned assets are hesitant to sharp rental reductions
to minimize the impact on the overall portfolio value, however, they are providing a
variety of incentives to attract and retain tenants as tenant retention continues to be
the most important issue for landlords.
Occupancy and tenant retention
As most new office demand is dominated by relocation or downsizing activity while
sub-leasing activity also gathers pace, we foresee maintaining occupancy levels and
retaining tenants be the main focus for commercial landlords
Rise of technology clients
Globally, technology and allied sectors are the new major landlords, superseding the
BFSI and service industries. We are also seeing rising volumes of technology clients
and take-up in Dubai.
Furnishing and fitting out shell and core spaces
As most enquiry levels are for fitted/plug and play offices, we expect landlords to
increasingly convert their shell and core assets to CAT A fit-out (raised floor and
ceiling) or completely furnish to aid absorption.
Repurposing building use
With some of the older stock underperforming, developers and landlords are looking
at refurbishing office units or repurposing retail/mixed use into office space to
optimise asset classes and footprint.
Grade A supply performance
With nearly 67% of new supply coming in the Grade A segment (2018 - 2020), most of
the large occupier activity is expected to be in this segment in the next few years.
Rise in retail logistics
With the pandemic accelerating acceptance of online retail, retail logistics is a growing
segment, and we expect more players expanding to improve their omnichannel
offering.
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core-me.com/research core-me.com/research 23DUBAI ANNUAL MARKET UPDATE 2020 - 2021
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RESEARCH
AND ADVISORY
PRIME DUBAI
CENTRAL DUBAI DUBAI ANNUAL Harnessing years of regional experience, backed
LONDON MARKET MARKET MARKET
SNAPSHOT UPDATE UPDATE UPDATE by local research and transactional expertise in the
UAE, we strategically advise our clients with data that is
2020/2021 Q3 2020 Q1 2020 2019/2020
Prime Central Dubai Dubai Dubai Annual driven by our strong brokerage network.
London Snapshot Market Update Market Update Market Update
2020/2021 Q3 2020 Q1 2020 2019/2020 Our widely circulated periodic market reports and white
papers capture the underlying property trends and
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CORE Research
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CORE Research
core-me.com/research guide market players in the region.
CENTRAL
LONDON
DUBAI MARKET UPDATE DUBAI OFFICE
SNAPSHOT
2019
YTD 2019
MARKET REPORT 2018 - 2019
Our extensive real estate databases are also utilised by
our advisory professionals who deliver customized
reports based on client’s specific needs. Our team
work closely with various real estate developers
and investors across all asset classes and
ABU
DHABI Commercial throughout the development process, Development
MARKET
concepts optimizing their returns and strategy
UPDATE
2019/2020
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reducing risks.
Abu Dhabi Prime Central Dubai Market Dubai Office
Market Update London Snapshot Update Report Market Report
2019/2020 2019 YTD 2019 2018 - 2019
CORE advises private and institutional clients seeking Broker opinion Highest and
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property in the UAE. We provide integrated expertise
across the following property sectors;
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Head of Research and Advisory
• Hotel
prathyusha.gurrapu@core-me.com Investment Feasibility
• Residential
memorandum study
The foundation for our business is a partnership that
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customer service. We continue to seek strong,
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offering and provide added value for our clients, both
in the UAE and abroad.
Supply/demand Market positioning and
Our extensive transaction history in the UAE provides Robert Thomas analysis benchmarking analysis
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service including:
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