A government push to promote foreign investment may have the potential to spur activity in Dubai’s office market.
According to a recent JLL report, two key announcements made by Dubai’s government in the second quarter of the year could stimulate demand and support the office market in the city.
These include a reduction in the fee charged on businesses by the Dubai Municipality from 5% to 2.5%, and the relaxation of existing regulations to allow 100% foreign ownership in businesses located outside of free zones.
Craig Plumb, head of research, JLL MENA, said: “These new government announcements should help improve market sentiment and have the potential to directly increase investment and office occupancy across the emirate.
“The potential surge in foreign investment, particularly from businesses operating in the non-oil sector, could ultimately lead to a boost in demand for quality commercial space.”
Plumb added that although there were no office completions this quarter, the availability of space increased across the CBD over the past year, with around 10% of the current stock being vacant.
“This is favorable to tenants, providing them with an increased choice of potential premises in a market where demand for quality space remains high. Demand is likely to persist as a result of the relaxation of foreign ownership requirements,” he added.
The recent announcement of 10 year residency visas for certain categories of staff is also likely to have a long term positive impact on the residential sector.
JLL notes that the 10-year residency initiative could instil confidence in the expatriate population, boosting sales activity in the UAE.
Earlier this month, Dubai retained its position as the most transparent market in the Middle East due to a range of new government initiatives and an increasingly dynamic proptech industry, according to JLL’s Global Real Estate Transparency Index (GRETI).
The city was among the top three improvers globally in the ‘Semi-Transparent’ category, moving up the rankings eight places to 40 out of 100 markets covered in 2018.