Dubai’s office space supply is set to increase by 7 per cent in 2016, according to research from Core, the UAE associate of real estate firm Savills.

Despite sales prices declining by 9 per cent in Business Bay last year, the majority of this year’s growth is expected to occur in that area, as it seeks to establish itself as one of the premier business districts in the region. The rapid growth of supply in Business Bay is responsible for the slight downturn in 2015.

Whilst rates of rent have remained stable in areas such as Bur Dubai and Healthcare City, where cost is lower and stock is older, DIFC, an example of a prime location, has grown by 7 per cent.

“[In 2015] prime properties significantly outperformed the average market in terms of rental rates and occupancy levels,” says Core UAE CEO, David Godchaux.

“We expect this trend to continue over the next few years, with relatively strong underlying demand for quality office space that is currently not being fully met. This has resulted in a widening gap on rate and occupancies between prime and Grade B offices,” he adds.

By the beginning of 2016, Dubai’s office market supply was estimated to be at 8.4 million square metres, of which about 2.4 million sq m (28 per cent) is located in the prime areas of DIFC, Downtown Dubai, Sheikh Zayed Road (Trade Centre to First Interchange), Dubai Internet City and Dubai Media City. The bulk of Dubai’s office supply is located in areas such as Business Bay, Deira, Bur Dubai and Jumeirah Lake Towers (JLT).