In Dubai, where almost half of the offices sit empty, the head of a state-owned business zone says there's room to build the world's tallest office tower.
Ahmed Bin Sulayem, chairman of the Dubai Multi Commodities Centre, said the Persian Gulf business hub can still attract tenants and investors with such a project because many of its buildings are unsuitable for large businesses. Bin Sulayem helped lead the development of the DMCC's 68-storey Almas Tower, Dubai's tallest building when it was completed in 2007. The tower's full and has a waiting list for tenants, he said.
"The crisis has shown us that well-designed and -thought out developments will always hold value and demand," Bin Sulayem said.
"We will be running out of space and the world's tallest commercial tower will help attract more companies."
Dubai's speculation-driven property boom saddled the Persian Gulf sheikhdom with thousands of offices that are unattractive to businesses because of their design, location or ownership. Companies looking for at least 5,000 square metres are frequently unable to find what they want and are increasingly looking for "built-to-suit" deals, broker Jones Lang LaSalle said. About 45 per cent of the city's offices are empty, according to CBRE Group, another broker.
The skyscraper would be at least 520 metres tall and stand at the centre of a 107,000 square metre development that will include commercial buildings for companies that require their own facilities, said Mathew Lomax, director of property at DMCC. The free-zone authority plans to sell part of the tower, to be built over five years at a cost of about US$1 billion, and keep the rest to generate rental income.
"We will go around and make sure that multinationals are aware of this building before we go to the rest," Bin Sulayem said.
The cranes won't be going up any time soon. The skyscraper has yet to be designed, a contractor hasn't been commissioned and financing hasn't been secured. Funding will probably come from advance sales as well as loans and Islamic bonds, the chairman said.
The need for big corporate office spaces doesn't justify a project like the one DMCC envisions, said Matthew Green, head of United Arab Emirates research at CBRE. The higher costs of building a tall tower force the owner to ask for higher rents and selling prices, he said.