The UAE is a very attractive destination for investors in the region, and after having shown a sustained and improved growth throughout 2012, property sales in the UAE are expected to rise this year. This growth is likely to be sustainable in the near future, as more and more properties for sale in Dubai are expected to arrive to the market. In fact, the announcement of new undertaken projects in Dubai renewed the confidence in the property market. Foreign buyers are returning to the market, and this sector is expected to witness a steady growth for the coming period. This positive boost in the real estate market is enhanced by the Government's mega projects in transport, tourism and logistics.
Another positive factor resides in the fact that the Arab Emirates are considered to be a relative safe haven in the perturbed Arab region. Dubai's economy is forecast to grow in excess of 3% per annum in 2012-13. Compared to other countries in the GCC, Dubai is in good shape economically, the financial and tourism sectors in particular are benefitting from the unrest elsewhere in the region.
The office property market shows this sector as very competitive, due to high levels of supply. Dubai's office market is forecast to see demand of around 4.5 million square feet over 2013, with rents expected to remain flat, according to the latest analysis from CBRE. Abu Dhabi and Dubai office markets were more tenant-friendly in 2012, and this trend is expected to be maintained in 2013. Offices rents are relatively stable, and more incentives and flexibility are expected in lease terms. Tenants keep focusing on upgrading their premises, and optimizing their lease terms.
Demands on prime locations remains high, while secondary locations suffer from slower demand. Around 12 million square feet of office space is expected to be delivered by the end of 2013, mainly in Business Bay, DIFC, Silicon Oasis and Dubai World Central. Despite the large new supply, there remains a shortage in Grade A offices, suitable for large companies. Due to this unbalanced supply of different office categories, prime rates are stabilizing, while Grade B rents are decreasing.
In 2012, Dubai business centers occupancy recorded a growth of 25% compared with 2011. The majority of the occupiers are start-ups and small to medium-size companies, while foreign companies occupied around 40% of available space. Again, investors are able to test the UAE real estate property market, and assess the existing opportunities without major investments, through Servcorp's serviced offices and business packages.