Dredge, who lost to Padraig Harrington in a playoff here last year, overcame a slow start by making six birdies over the last 10 holes to sit at 9-under 207. Richard Finch, who won the New Zealand Open in December, was one shot back after a 65.
Lee Westwood had a tournament-best 64 and held third place, one ahead of David Frost (66), Felipe Aguilar (67) and Robert Karlsson (69).
Darren Clarke got into contention by making four birdies in five holes on the back nine, leaving him two off the lead, but ended with a triple-bogey eight on the last hole for a 72. He was tied for 17th with Harrington, who had a 70 to sit six strokes off the lead.
Halfway leader Michael Lorenzo-Vera faded with a 75 and dropped to a tie for 23rd.