By Matt Smith www.abcnews.go.com
DUBAI (Reuters) – Dubai’s office vacancy levels will rise to more than 50 percent in some areas and the emirate should mothball or demolish buildings to try and limit over-supply, Jones Lang LaSalle said in a report on Sunday.
Demand for office space in Dubai is centered on two locations, it says: the financial district, which includes the Dubai International Finance Center and Burj Khalifa, the world’s tallest tower, and the TECOM freezone, which includes Media City and Internet City.
Vacancy rates in the financial district will rise from around 12 percent at present to a peak of between 30 and 40 percent over the next 12 to 18 months, but should fall to 10 to 15 percent by 2014. Figures for TECOM were not available.
“Elsewhere, the outlook remains less positive, with the likelihood that vacancy levels outside of the CBD will increase to more than 50 percent,” the report said.
The agency claims the best way for Dubai to reduce vacancies is to follow the lead of other cities such as Sydney and Bangkok by trying to limit supply through the conversion of buildings into non-office uses, mothballing projects or demolition.
“Without radical moves to restrict future supply and remove some existing stock, it is likely that vacancies will remain at high levels in these locations, with many buildings having little or no prospect of attracting tenants in the foreseeable future,” the report said.
Based on current completion schedules, Dubai office space will rise by 43 percent in 2010 to around 63 million square feet, although this figure is likely to be revised downwards as projects are withheld, Jones Lang LaSalle said. (Reporting by Matt Smith; Editing by Dinesh Nair)