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Dubai commercial property sees high demand

Shortage of Grade A office space pushing prices

In terms of commercial real estate, what are the prospects in Dubai?

It is evident that the market is currently experiencing a significant shortage of A-grade quality properties in prime locations. This scarcity of supply has been further exacerbated by the limited number of properties entering the market. As a result, the demand for high-quality commercial spaces far outweighs the available inventory.

Notably, the ongoing trend of a growing number of trade licenses being issued in Dubai has contributed to the surge in demand for commercial properties. The emirate's reputation as a global business hub, coupled with its business-friendly environment and strategic geographic location, continues to attract entrepreneurs, startups, and established enterprises seeking to establish a strong presence in the region. Given the prevailing market conditions, we anticipate that the demand for commercial properties in Dubai will persistently outpace the available supply in the foreseeable future. As a result, investors and businesses looking to secure prime commercial spaces should act with foresight and engage in strategic decision-making to capitalize on the lucrative opportunities available in this thriving market.

Which areas are the most promising from an investor’s point of view?

For investors seeking opportunities in Dubai's freehold zones, several prime areas stand out as ideal options with a diverse selection of commercial units available. Business Bay, Jumeirah Lake Towers (JLT), and Barsha Heights are prominent locations offering an array of attractive office spaces for investment. These areas boast strategic positioning, excellent connectivity, and a thriving business environment. Commercial units within Business Bay, JLT, and Barsha Heights have demonstrated the potential to yield attractive returns on investment, averaging between 6% to 8% ROI. These figures reflect the robust demand for commercial properties in these sought-after districts, making them compelling choices for investors seeking steady and favorable returns on their investments.

Alternatively, for those interested in investing in warehouses to support their business activities, it is evident that Dubai Investment Park (DIP), Al Quoz, and Dubai Industrial City (DIC) present lucrative opportunities. These industrial zones have become synonymous with their significant contribution to the city's logistics and manufacturing sectors. The warehouses available in DIP, Al Quoz, and DIC have shown the potential to generate impressive returns, with an average ROI of 12%. This compelling rate of return underscores the attractiveness of these areas for investors seeking substantial profits from their warehouse investments.

With remote working catching on, has this in any way affected the commercial segment?

The current global trend of flexible work arrangements, including work-from-home options, has had minimal impact on the commercial property landscape in Dubai, as demand continues to remain strong. While companies are increasingly adopting remote work policies to enhance employee satisfaction, productivity, and work-life balance, they must also navigate certain legal requirements set forth by the UAE government.

According to UAE labour laws, there are specific guidelines concerning office space requirements to ensure the well-being and comfort of employees. The law mandates a minimum area of office space per square foot per person, known as the "density ratio" or "quota."

Dubai continues to be a business-oriented city, with various sectors and industries thriving within its dynamic economy. As a result, there are diverse companies with different office space needs. Moreover, having a physical office can be advantageous for building a company's brand identity and creating a professional corporate image. It also provides a dedicated space to host clients, partners, and stakeholders, fostering a sense of credibility and reliability.

It is important for those of us working within the commercial property market of Dubai to understand these evolving trends and the varying needs of businesses to assist clients in finding suitable office spaces that align with their unique operational requirements, legal obligations, and future growth plans.

The writer is director of CRC, a unit of Betterhomes.