Currently the commercial real estate market in Dubai shopping center is booming creating huge opportunities for savvy investors. Property prices and rental yields are increasing rapidly as demand for office, retail and mixed-use space far exceeds supply.

But finding good investment properties in attractive locations is also becoming increasingly difficult. Existing units in central areas such as Business Bay and Downtown Dubai are reportedly already more than 95% occupied. New startups next year may not be enough to meet the rising demand from thousands of companies that set up base in Dubai every month.

This mismatch between supply and initial demand is driving commercial lease costs up by as much as 300% in some areas in the last couple of years alone and the yields for investors are reaching their peak happiness not seen for years. For those who manage to find a property in the right location, the prospects for improved rental income and potential capital appreciation look very promising. 

Why is Demand for Dubai Office and Retail Spaces Booming?

Several factors are fueling the unrelenting demand pressure in Dubai’s commercial property sector:

• Dubai continues diversifying its economy away from oil dependence and positioning itself as a global business and financial hub. Over 30,000 new companies were registered with the Dubai Chamber of Commerce in the first half of 2023. 

• Major infrastructure projects like Expo City and initiatives to promote sectors like innovation are attracting more regional headquarters and multinational corporations to set up regional bases.

• The emirate’s business-friendly regulations, political stability, excellent connectivity and multicultural environment make it an ideal center for many industries in the Middle East, Africa and South Asia region.

• Geopolitical tensions and economic uncertainties in other markets are prompting more firms to see Dubai as a safer option for their Middle Eastern operations.

• Rising inflation and higher costs of living in cities like London and New York are encouraging remote work from Dubai as well.

• Co-working spaces catering to startups and SMEs are in huge demand, transforming the flexible office market.

• Hotels along Sheikh Zayed Road are converting unused spaces into mixed-use zones of offices, retail, F&B and residences to maximize revenues.

• New residential towers also incorporate more retail at their bases to meet demand and enhance live-work-play environments.

Scouting for the Right Investment Properties 

Given the scarcity of available properties in prime areas and the fast market, investors need to act swiftly yet carefully to capitalize on Dubai’s commercial property boom. Here are some tips:

• Consider older buildings with scope for refurbishment and redevelopment rather than new launches facing longer delivery timelines. 

• Look at mixed-use buildings with offices, retail and residential to benefit from various income streams. 

• Check locations with good office tenant demand like the DIFC, Business Bay or Jumeirah Lakes Towers free zones. 

• Co-working spaces and flexi-offices are lower risk than conventional leases but offer strong yields and growth potential.

• Work with experienced brokers and consultants who understand market cycles and can spot undervalued assets. 

• Study tenant profiles, building infrastructure and future connectivity projects around potential investments.

• Consider joint ventures or partnerships to diversify risks if investing larger sums individually.

• Leverage financing options from local banks at competitive rates to maximize returns through leverage.

With Dubai’s economy set to double over the next decade, backed by Vision 2040, its commercial real estate sector is poised to continue to grow With investors who have appropriate resources and risk appetite current market conditions present a unique opportunity to maximize returns . With diligent research and planning, savvy capital can reap rich rewards from Dubai’s commercial property boom years.

In this guide, we are committed to reaching financial sustainability by investing in Dubai’s real estate markets. Dubai is trying to fulfil the demand for properties. So now is the best time for investors worldwide, especially London investors.

They can avail robust results of their golden chance by viewing the London real estate market contribution in comparison to Dubai real estate market insights to know how Dubai real estate marketing is accelerating the UAE economic engine.

Dubai is offering multiple properties for sale with diverse budget options that will lead the investor to be sustainable, as Dubai’s economy is sustainable for its emerging economy.

Remarkable UAE real estate statistics and the upgrowing contribution of Dubai real estate are calling investors to take advantage of the long-term permanent residents of the UAE by investing with their devoted budgets in the uplifted UAE real estate industry.

Dubai Real Estate Analytics Study for London Investors

After taking an in-depth look at Dubai’s overall real estate strategy for the year 2023, key insights are compelling to confess that Dubai will be profitable if you invest in its real estate to increase the overall size of the real estate market.

How will real estate sustain Dubai’s economy with a proven track record of go-ahead insights? Statistical content is given, which will encourage you to decide to invest in the UAE if your target is to invest in any other country. Still, with market indicators, you get confirmation of profit by investing in Dubai.

The comparison between London and Dubai markets provides solid logical reasons for London investors to expect expanding outcomes with the assistance of a well-developed UAE economy.

The ValuStrat Price Index (VPI) for February registered 164.1 points, up 23.1% annually

Highly desired villas in Dubai have more than doubled in value in three years, whilst apartment prices are up by just over a third on average, new data showed on Wednesday.

The ValuStrat Price Index (VPI) for February registered 164.1 points, up 23.1 per cent annually, with a monthly increase of 2.1 per cent. Villas were at 206.1 points, and apartments were 136.6 points, this is compared to 100 points base set in January 2021.

The VPI is a valuation-based price index constructed to represent periodic change in capital values and rental values experienced by typical residential and commercial properties. The VPI for Dubai’s residential capital values is updated on a monthly basis. The VPI for Dubai’s residential rental values is updated on a quarterly basis.

The apartment submarket in the emirate saw prices accelerate at 1.9 per cent monthly and expand a record 18.6 per cent annually. The highest year on year capital growth in apartments was recorded in Discovery Gardens (30.7 per cent), The Greens (27.9 per cent), Palm Jumeirah (27.4 per cent), Town Square (23 per cent), and Dubai Production City (22.9 per cent).

Villa capital gains during the month were up 2.4 per cent compared to January and 28 per cent since last year. The top annual performers were villas in highly desired Jumeirah Islands (36.1 per cent), Palm Jumeirah (35.1 per cent), Dubai Hills Estate (33.6 per cent), and Mudon (29.6 per cent).

Off-plan Oqood (contract) registrations jumped 32.6 per cent annually and 5.7 per cent monthly. Ready home transaction volumes grew 30.5 per cent annually and 9 per cent monthly, representing a minority 36.9 per cent share of overall residential sales for the month.

February saw 20 transactions of ready properties priced over Dh30 million, these were located in Emirates Hills, Palm Jumeirah, District One, Jumeirah Bay Island, and Dubai Hills Estate.

Topping the sales charts overall this month were properties developed by Emaar (13.3 per cent), Damac (9.9 per cent), Danube (7.6 per cent), and Sobha (5.7 per cent). Top off-plan locations transacted included projects located in Jumeirah Village Circle (11.8 per cent), Dubai Maritime City (11.4 per cent), Business Bay (6.4 per cent), and Bu Kadra (4.5 per cent). The majority of ready homes sold were in Jumeirah Village Circle (9 per cent), Business Bay (7.2 per cent), Dubai Marina (5.9 per cent), Downtown Dubai (5.8 per cent), and Dubai Hills Estate (5.1 per cent).

Dubai’s white-collar workers have returned to the office in earnest

The commercial real estate sector in Dubai is reaching new heights, with high-end space especially in demand as businesses seek to stand out from the crowd and woo employees back with a workplace environment worthy of the daily commute.

Emirates REIT (CEIC) PLC, the largest Shariah-compliant Real Estate Investment Trust’s (REIT) in the world, which is managed by Equitativa (Dubai) Limited, has first-hand experience of this trend. Emirates REIT is seeing robust demand for commercial space at its flagship Index Tower in Dubai International Financial Centre. Occupancy at the impressive 80-storey building, which was designed by Foster & Partners, continued to increase in 2023, to reach 82 per cent in the third quarter of the year. At the same time, rents also increased significantly.

“There is an interesting dynamic in the market, with strong demand for higher-end commercial leasing,” said Thierry Delvaux, CEO, Equitativa (Dubai) Limited. “A year ago, the market was driven more by companies seeking to take on or expand their office space – but with an eye on costs. Now we see greater optimism – and more focus on the value that businesses can gain by investing in a higher-class office: An impressive place to invite clients for meetings, closer proximity to major regional and international companies, and a happier and more motivated workforce.”

Delvaux added that commercial tenants at Index Tower value being in an iconic, recognisable tower, that can be accessed easily by car, taxi or metro. Since Dubai’s white-collar workers have returned to the office in earnest, Delvaux said that companies are more likely to put a premium on ease-of-access for their employees.

“Employers want their staff to spend more time in the office because they see the value of collaboration and teambuilding that comes with people working in the same space, but they also understand that their employees don’t want to spend 30-minutes trying to access parking or walking a long distance from the nearest metro station,” Delvaux added. “And when they reach the office, they value being in a space that is good for their well-being and makes them feel motivated. It might be difficult to measure, but these non-tangibles pay off very quickly for employers.”

Will Dubai Holding look to new markets with its combined real estate influence?

The deal is set to combine a complementary suite of services and expertise to diversify Dubai’s economy and maximize its competitiveness.

Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai has consolidated the emirate’s major real estate developers under Dubai Holding to “sustain and advance growth” in the city’s property market.

Nakheel and Meydan are set to become part of Dubai Holding under the leadership of Sheikh Ahmed bin Saeed Al Maktoum.

The boards of the two property firms will be abolished.

“In a new milestone to reinforce and boost our economic growth, today we directed the inclusion of Nakheel and Meydan companies under the umbrella of Dubai Holding, forming a global economic entity with a diverse portfolio in sectors such as technology, media, hospitality, real estate, retail, and more,” Sheikh Mohammed said.

“The goal is to create a more financially efficient entity, owning assets worth hundreds of billions, and comprising global expertise across various sectors with which we can compete regionally and globally, achieving our national objectives, and realizing the Dubai Economic Agenda D33.”

Nakheel and Meydan are joining Dubai Holding to further develop a highly diversified conglomerate operating in several sectors across real estate, hospitality, entertainment and investments.

he transaction is set to combine a complementary suite of services and expertise to diversify Dubai’s economy and maximize its competitiveness in the global marketplace.

Founded in 2004, Dubai Holding has grown exponentially, creating positive strides to foster an innovation-driven knowledge-based economy.

The holding firm counts Jumeirah Group, Dubai Properties and TECOM Group among its portfolio companies.

The company sold its 50 per cent interest in the Dubai Creek Harbour project to Emaar Properties in a deal valued at $2.04bn (Dhs7.5bn) in 2022.

It also sold a 12.5 per cent stake in TECOM through an initial public offering on the local bourse in 2022.

Watch out for one-off Ramadan offers, especially on offplan property

During the first quarter of each year, the Dubai real estate market is a hive of activity.

Experts noted that the rents could go up between 10 to 20 per cent in the near future

The Real Estate Regulatory Authority (Rera) index for Dubai has been updated and is likely to impact tenants who have been living in properties for over two years.

The revised rents calculator left landlords happy and tenants sad.

Khaleej Times quoting Richard Waind, CEO of Betterhomes, reported that Rera calculator was updated on March 1 that explains how much rent on renewal can increase based on a benchmark rent for each community.

Experts anticipate particular central villa communities and waterfront apartment communities will be most affected

Industry experts noted that the rents could go up between 10 to 20 per cent in the near future due to the revision in certain areas. Contrary, revision in the calculator could help bring down rents in the long term.

As per Dubai Rental Report 2023, Dubai’s rental market has witnessed a significant increase in rents and activity in the past two years, ending the negative growth cycle that began in mid-2015 and lasted until late 2021. In the year to July 2023, we have seen average rents in Dubai increase by 22.0%. In the year to date to July 2023, the total number of tenancy contracts reached a total of 325,727, a 43.5% increase from the 227,011 contracts registered in the same period in 2019.

Dubai has positioned herself as the ultra-rich hub which provides luxury lifestyle, booming real estate and above all destination for wealth preservation.

This was stated by Kashif Ansari, CEO and Co-founder of Juwai IQI, during an exclusive interview with Gulf Today.

Lack of quality stock to keep office rents high, CBRE predicts

Prime residential real estate in the UAE is expected to provide an yield of 6.25 per cent to seven per cent, a new report showed on Wednesday.

According to CBRE Research’s 2024 Market Outlook for Middle East real estate, residential properties are expected to provide an yield of seven per cent to 7.5 per cent.

In the office category, the expected yield range is 6.5 per cent to 7.25 per cent for prime offices, while for grade A offices, the range is seven to 7.5 per cent.

The total value of real estate projects currently planned or under construction in the UAE, at $409 billion, accounts for 24.4% of the total projects in the Gulf Cooperation Council region, the report said.

In the residential market, the UAE continues to be the only market which has recorded both price and transaction volume growth in 2023, the report noted. “In Abu Dhabi, we expect that transaction volumes will continue to grow over the course of 2024, with new high end and prime stock expected to underpin stronger rates of price growth on average. Existing and dated stock, on the other hand, is likely to materially underperform the market,” the report said.

In Dubai, CBRE expects transaction volumes to decrease marginally. “Price growth in the apartment and villas segments of the market will continue. However, we expect this rate to moderate somewhat over the course of the year,” the report said.

In the office space category, CBRE sees occupier activity in the UAE is likely to remain resolute in the year. “We forecast that Prime and Grade A assets will continue to outperform the market, given the scarcity in supply and rising demand for high-quality assets. In Dubai, with the lack of existing quality stock, elevated demand levels and the limited number of developments in the pipeline, which are seeing strong pre-leasing activity, we expect that rental rates will continue their upward trajectory moving forward, however at a slower rate than the year prior,” CBRE said in its report.

In retail, average rents increased in Abu Dhabi and Dubai by 10.7% and 17.6%, respectively last year. “Looking ahead, we expect that the levels of demand in both Abu Dhabi and Dubai will remain strong. However, the lack of quality stock, particularly in Dubai, remains the most significant concern. Given this, we expect that new rental registrations will continue to edge down, although total demand will remain net positive. Rental rates are expected to continue to increase, however, we do expect that the rate of rental growth will moderate in both Abu Dhabi and Dubai,” the report said.