Dubai’s Commercial Property Boom
Dubai’s commercial properties are experiencing a significant boom due to low vacancy rates, which have reached a low point of 8.6 percent. This is largely attributed to the influx of foreign companies and the introduction of new businesses. According to Sapna Jagtiani, a leading analyst in the Middle East, the high demand for commercial space, particularly for prime and grade-A offices, is driving this growth.
Factors Contributing to Growth
The strong growth of commercial properties in Dubai is supported by regulations that favor companies, a dynamic economic environment, and the low tax rates offered to businesses. These factors have created a conducive environment for companies to operate and thrive, leading to increased demand for commercial space.
Retail Properties
Dubai and Abu Dhabi have a resilient demand for retail properties, with a small rental growth. Prime super regional malls continue to dominate the market, leading to shopping center owners expanding their offerings. Popular shopping centers in Dubai have a waiting list for new customers due to the low vacancy rate. Buyers from the Gulf Cooperation Council (GCC) are looking for unique concepts, new brands, and experiences.
Urbanization Trends
Urbanization trends, particularly in Riyadh and Jeddah, are driving the demand for modern retail formats and omnichannel strategies. Shopping center owners who fail to keep up with these trends may face rental pressure and higher vacancies. Despite this, luxury spending in the region remains high, with growth available for mainstream traffic.
Moderate Correction in Residential Properties
The market for residential properties in Dubai is expected to experience a moderate price correction in the next 12 to 18 months. This is due to a potentially significant increase in new supply, but the degree of correction is likely to be moderate compared to previous instances. A price correction of no more than 15 percent is forecasted. Despite this, presales are breaking records in Dubai, with a high demand for luxury units.
Demand for Luxury Units
The demand for luxury units over 10 million dirhams (2.72 million US dollars) has increased, driven by cheap visa reforms and a high quality of life. The UAE and Dubai have historically benefited from being a safe haven from regional and global geopolitical conflicts, triggering population growth and investment inflows.
