MENA occupier sentiment series – June 2015 by JLL

MENA OCCUPIER SENTIMENT SERIES June 2015

1 – GROWTH MARKETS

The UAE’s macroeconomic  environment remains strong and conducive to corporate growth and investment. The political and social unrest that has swept across the MENA region since 2011 has confirmed the UAE’s position as a “safe haven” within a volatile region. Within the UAE, Dubai has cemented its place as the preferred business and financial centre within MENA. It’s success at diversifying its economy, supported by a strong private sector, has acted as a buffer against recent falls in oil prices, and allowed Dubai to achieve stronger economic growth than the rest of the UAE in 2014/2015. The emirate is expected to consolidate its position as the favoured location for corporate occupiers in the MENA region over the next three years.

DUBAI IS THE PREFERRED MARKET IN MENA

Discussions with international corporates reveal they are currently forecasting a headcount growth of between 5% and 20% per year in the UAE over the next three to five years. This is driven by:

DUBAI IS THE PREFERRED MARKET IN MENA
DUBAI IS THE PREFERRED MARKET IN MENA

2 – CHOICE OF BUILDINGDUBAI CHOICE OF BUILDING

The performance gap between projects offering high quality amenities, sufficient parking, good accessibility and international standards of property management, is likely to widen in terms of higher occupancy and rental levels.

3 – QUANTUM OF SPACEDubai QUANTUM OF SPACE

As occupiers remain more focused on accommodating growth within existing real estate portfolios, we see limited increases in net absorption in most MENA markets. This trend is likely to continue as corporates focus on cost containment strategies.

4 – Use of space

While government agencies and local companies still prefer traditional cellular offices, multinational corporates are looking to introduce more open, collaborative, and flexible designs within their MENA offices as part of their workplace strategies to improve productivity.

SIGNIFICANT CHANGE IN THE USE OF SPACE

  • Workplace transformation is taking on a new significance at the global level, as corporates respond to changing economic conditions, with a continued emphasis on cost control and efficiency gains.
  • Corporates are re-designing their workplaces to create more open, collaborative and flexible spaces and are increasing their use of alternative workplace strategies such as hot desking and remote working, as opposed to traditional enclosed offices.
  • This is supported by technologies, such as web conferencing, which have driven global connectivity, increased mobility, and have aided in re-designing workplaces.

5 – SUSTAINABILITY

Occupiers attitudes towards green building features and specifications are now changing as real financial benefits are being increasingly recognized. Those buildings able to demonstrate lower occupancy costs will enjoy a rental premium, as occupiers focus more on total occupancy costs over the period of their lease, rather than just on the initial rent.

SUSTAINABILITY PREMIUM – PROVIDING OPERATIONAL COSTS CAN BE REDUCED

  • Although MENA generally lags behind other global regions on green building legislation, there is an increasing recognition among corporates of the impact that sustainable buildings have on businesses from an operational standpoint.
  • This is evident from our discussions with corporates, which reveal there is a willingness to pay a rental premium for sustainable buildings providing they result in savings in operating costs, and therefore total occupancy costs, over the length of a corporates’ tenure.
  • Responding to this trend, more developers are now seeking LEED certification to differentiate their buildings from the rest of the market, particularly in Dubai.

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