|Beirut office rents among highest
|REPORT: Regionally Only kuwait has Pricier commercial Space
Beirut commercial real-estate is the second-most-expensive in the MENA region and ranks 30th globally, according to a 2006 survey of office-space costs around the world.
The report - released by the property consulting firm Cushman, Wakefield, Healy, and Baker (CWHB) - looked at 215 prime business locations in 54 countries.
Office space in Beirut's Downtown Central District (DCD) costs 318 Euros per square meter annually, compared to 500 Euros in Kuwait, where commercial real-estate is the most expensive in the region, according to the report.
Chris Bond, a representative from CWHB's London office, told The Daily Star that high real-estate prices in general are due to an inadequate supply of well-equipped office space and are not directly correlated to a countries' economic health.
"The study showed a global trend; if there is a shortage of office spaces that meet international standards in a particular city, then the annual cost of a lease goes up," he said.
While real-estate in newly reconstructed downtown is booming, the office market outside of DCD was stagnant in 2005. The study estimated a 10 percent vacancy rate for Beirut office space in general, but noted full occupancy at almost all prime buildings. The availability of well-equipped office space is expected to remain unchanged in 2006, but to increase over the next three years due to a spate of construction projects.
Michael Dunn, the head of CWHB's associate office for Syria, Jordan, Lebanon and Egypt, agreed that an inadequate supply of high-quality buildings was driving real-estate costs up but said that other factors were also at play.
"The lack of good space is certainly a factor, but keep in mind Beirut is also an expensive city. Look at the low vacancy rates in a few of the best buildings like the An-Nahar building and Atrium that are almost full with Multinational companies," Dunn said.
Dubai - arguably the MENA economic hub - was not among the five most expensive areas because excess capacity in commercial office space has kept real-estate costs relatively stable, at around 60 Euros per square meter for the past five years. Tel-Aviv ranked third in the report, with office space costing 313 Euros per square meter; Istanbul and Sandton came in fourth and fifth, with going rates of 238 and 179 Euros, respectively.
Antoine Saadeh, the managing director of real estate for the ABS Group, contributed a third explanation for the Beirut market. He said that the limited availability of well-renovated office space is a necessary but not alone a sufficient condition for expensive rents, since many other countries boast high-quality office space, often at a lower cost.
"The third reason is that multi-national companies want to have their regional offices in Beirut, because of its reputation. There is too much demand for offices in Solidere, especially from international companies. Everyone wants to be here because it has a certain cache," he said.
The Daily Star