UAE commercial property highest demand in a decade
Economic growth fuels surge in occupier interest across office, retail, and industrial sectors
UAE: In the second quarter of this year, the UAE's commercial real estate sector experienced its strongest occupier demand in a decade, fuelled by sustained economic expansion, according to a report by the Royal Institution of Chartered Surveyors (Rics).
Occupier demand surged to plus 58 percent from April to June, marking the highest reading since 2014 when it reached plus 64 percent. The office segment led the demand, followed closely by retail and industrial properties.
Abdullah Akaish, senior public affairs officer at Rics, as quoted by a publication, attributed this robust demand to optimistic rental and capital value forecasts, particularly in Dubai, where population growth continues to drive commercial property needs.
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Akaish noted a noticeable scarcity of supply in the market, as developers prioritize residential projects. This supply-demand imbalance is bolstering rental expectations and reinforcing a positive market outlook.
The UAE's economic growth, supported by higher oil prices and expansion in the non-oil sector, underscores the buoyant property demand. The economy expanded by 3.6 percent last year and is expected to grow by 3.9 percent in 2024 and 6.2 percent in the following year, according to projections, highlighted by Rics.
In the office sector, significant growth was observed in rental contracts in key UAE cities. Abu Dhabi registered a 9.1 percent annual increase with 10,475 contracts in the first quarter, while Dubai saw a 35.8 percent rise to 46,850 contracts during the same period, according to CBRE.
Gary Stevenson, commercial manager at Haus & Haus Real Estate, highlighted Dubai's remarkable expansion in commercial real estate, as portrayed by several statements, driven by population growth and a surge in businesses capitalizing on the city's strategic advantages.
Stevenson emphasized Dubai's appeal as a global business and travel hub, supported by its business-friendly environment, robust infrastructure, and attractive tax policies. Major business districts like Jumeirah Lakes Towers, Dubai International Financial Centre, Business Bay, and Downtown remain highly sought-after for their conducive environments for business growth and innovation.
The high demand has led to long waiting lists for the best buildings, particularly in Dubai, where over four million square feet of office space is slated for delivery in the next four years, much of which has already been pre-leased.
Several reports also pointed out that businesses are committing to space during construction phases to secure future growth opportunities, highlighting strong market confidence in Dubai's commercial real estate sector.