Dubai Land Department is planning to launch a price index for the office market, similar to Mo'asher, which monitors the residential sector
Dubai Land Department (DLD) is planning to launch a price index to add transparency to the emirate's commercial property market at a time when coronavirus has created uncertainty in the future of the office sector globally.
As thousands more workers in Dubai continue to work at home rather than in the office as coronavirus restrictions continue, DLD said it has signed a memorandum of understanding with Jones Lang LaSalle (JLL) to create a Commercial Property Price Index (CPPI).
The official commercial property index will act as a reliable source of data for use by investors, agencies, and institutions, a statement said, adding that it will also allow investors to monitor commercial market performance when making investment decisions and portfolio management.
"The partnership will see the two entities work towards continuing to improve Dubai’s transparency and overall real estate investment health," the statement said.
Majida Ali Rashid, CEO of the Real Estate Promotion and Investment Management Sector at DLD, said: "This partnership with JLL consolidates our commitment to strengthening the real estate sector in Dubai, the emirate’s position as a real estate leader on a global scale... DLD continuously introduces initiatives and products to help boost transparency in the industry to help in the decision-making of investors."
Thierry Delvaux, CEO of JLL MEA, added: "The agreement with DLD will allow us to collaborate to improve real estate transparency, in turn attracting local, regional, and global institutional investors into the market. Dubai already enjoys a prestigious position as one of the best investment destinations in the region, thanks to its strategic location and investment-stimulating environment. We look forward to further enhancing its position through the creation of this Commercial Property Price Index."
The announcement comes as research from real estate consultants Core revealed that a quarter of all office stock in Dubai is currently vacant.
Out of the total 104.9 million sq ft of office stock in Dubai, nearly 25.2 million sq ft is vacant, with the volume of vacant stock gradually increasing over the last five years.
The report said the importance of the physical office is unlikely to be diminished in Dubai as many businesses see a loss of productivity during the current "work from home" era caused by the coronavirus crisis.
Robert Thomas, head of agency at Core, said that although work from home will remain prevalent within hybrid models after coronavirus, it has also created problems for some businesses.
Last week, Dubai and Abu Dhabi were named the most transparent real estate markets in the MENA region.
According to the latest Global Real Estate Transparency Index from JLL, Dubai’s increasing attractiveness as an investment hub was recognized as the emirate climbed up three places to 36th.
According to the report, the most significant initiative launched in 2019, and a key contributor to Dubai’s ranking, was the creation of an official residential transaction-based index, Mo’asher, by the Dubai Land Department (DLD) in partnership with the private sector.
“Mo’asher constitutes a potentially important step forward for Dubai, as it means the establishment of a single index that is widely used by all market participants,” said Dana Salbak, head of research for JLL MENA.
Despite uncertainty about the office market post-coronavirus, ICD Brookfield Place was opened in September, adding nearly 1 million sq ft of Grade A office space.
According to Core, office rents have been under pressure across all the 15 districts it tracks during the third quarter of 2020.
Core also noted that occupancy levels have contracted across the board as first phase expansions remain limited and most new demand stems from relocation activity, keeping net absorption negative.
Source: Arabian Business