Dubai To Scale New Commercial Heights

Dubai, a city of tall towers and even taller ambitions, could soon become the most expensive commercial real estate location in the world. Does that claim sound outlandish? It's not. Recent reports already place the emirate sixth on a list of the world's costliest office space cities behind commercial big-hitters London, Moscow, Hong Kong, Tokyo and Mumbai. In London, currently the world's most expensive location, investors are becoming timid as they sit out the effects of a global credit crunch. Gloomy financial forecasts and belt-tightening measures have contributed to plummeting commercial property values with the latest figures pegging a 20 per cent decline in value and dark rumblings in the financial press that more bad news is on its way.

After more than a decade of good years, with positive returns, it looks like this wintertime could herald a number of barren years for the English capital. Meanwhile in the shiny, optimistic skyscrapers of Dubai, where the sun always shines, the sky is quite literally the limit when it comes to real estate. Voracious demand for office space is forcing prices through the roof and supply lags years behind.It's possible that spiralling costs may deter companies from setting up larger headquarter type offices in Dubai, prompting instead the setting-up of smaller, representative arms of businesses giving investors a presence in the Middle East, but not a head office.It's hard to see prices coming back down to earth much before 2012, but what happens after that is the big question for the UAE right now.

As of today, Dubai has around 19.1 million square feet of office space which boasts an incredible 98 per cent occupancy rate. Of the commercial property that is sold, most is snapped up off-plan as developers strive to keep up with demand. Between now and 2012, 75.8 million more square feet will enter the market. With more commercial property finally available in the UAE, it will be interesting to see what happens to prices both here and abroad.