Ryan Mahoney (Dubai, UAE) is the owner and CEO of CenCorpo. He is credited with cofounding the largest agency-owned real estate website operating out of the UAE. Having been heavily involved in several successful startups, including Taqado, MasterKey, and Dubizzle, Ryan Mahoney benefits from extensive experience of the Dubai real estate market. This article focuses on the Commercial Property Market Report recently published by CRC, focusing on commercial real estate in Dubai and the UAE.
2021 marked a major turning point in the commercial real estate market in the UAE. In Dubai, positive reforms fueled an increase in demand for commercial property, driving prices above even pre-pandemic levels. With the market making a virtually complete recovery, confidence increased strongly among business owners, enhancing optimism about the future of their companies, with demand increasing for larger, better quality commercial spaces.
Dubai’s government passed a raft of new policies designed to stimulate the economy during the pandemic, including implementing a new Monday to Friday working work in line with the rest of the world, a move which had a direct positive impact on the country’s commercial real estate sector. Despite the pandemic, Dubai’s economy remained the most robust in the region, with experts predicting that it will remain a highly attractive place for investment.
The CRC Commercial Property Market Report FY 2021 predicts that as the market returns to normality, overall, commercial property prices will continue to rise steadily in Dubai, supporting increased confidence in both the property market, and Dubai’s wider economy.
On the whole, UAE economies showed exceptional resilience throughout the pandemic, a buoyancy reflected in real estate markets. In 2021, as the commercial property market navigated its way out of the Covid-19 pandemic, the total value of units sold topped almost 31 billion, up by 35% compared with sales for the previous year.
Whether driven by the lifestyle, or new legal reforms increasing access to golden visas and citizenship for foreign investors, Dubai is currently attracting an influx of expats and investors, boosting demand for commercial property considerably. In 2021, the number of offices sold totaled AED 1.99 billion, representing an impressive 101% increase.
EXPO 2020 coincided with a resumption of international travel, culminating in an uptick in footfall for retailers. This in turn increased demand for retail spaces, particularly on street level, in communities like Jumeirah Lake Towers and International City. In 2021, retail transactions were than 96% higher than figures for the previous year, with the total value increasing to almost AED 690 million.
Since the pandemic started, many new residents arrived in Dubai to start new businesses and lives, some seeking to avoid lockdowns in their home countries; others entrepreneurs and business owners seeking to run and grow their ventures in a relatively open environment with minimal restrictions in terms of business operations. International City dominated retail sales transactions in 2021, with 157 retail unit sales reported, compared with 57 in Jumeirah Lake Towers, and 56 in Mohammed Bin Rashid City.
The UAE’s commercial property leasing sector also demonstrated steady signs of recovery throughout 2021. As demand in commercial leasing grew, this triggered an increase in rental prices, as new businesses started opening their doors across Dubai. The CRC report reveals an occupancy rate spike toward the end of 2021, particularly in Grade A buildings, as business owners looked for premises for their new and growing businesses.
The CRC report betrays a marked upward trajectory in terms of the price and size of offices sold, with a 100% increase in office sales in 2021 compared with 2020. Business Bay attracted the most sales, followed closely by Jumeirah Lake Towers, then Al Barari, Barsha Heights, Dubai Silicon Oasis, and Downtown Dubai.
Average office sizes increased by 9% in 2021 compared with 2020, with average office deal value rising by 11%. As confidence in the market continues to grow, increasing numbers of businesses are investing in commercial spaces, driving an increase in prices throughout 2021, a trend that property experts suggest is likely to continue throughout 2022.
EXPO 2020 attracted massive investment in Dubai, including expansion of the metro line, connecting communities like Al Furjan to the rest of the city. In addition to the highly successful EXPO 2020 international networking event, increased growth is also attributed to the government’s vaccination drive, which culminated in vaccination of approximately 93% of the population, providing many residents with easy access to two doses of the vaccine.