Dubai has emerged as one of the most attractive investment hubs in the world, with its booming commercial real estate sector providing an opportunity for investors to capitalize on the region’s rapid economic growth. The city offers many advantages for real estate investors, including a strong economy and a wide variety of property types to choose from. Furthermore, it enjoys some of the most lenient foreign investment laws in the region, with long-term rental contracts and high capitalization rates that add even more appeal to those looking to invest.
Dubai is also well-served by international flights and infrastructure developments are ongoing, further enhancing its attractiveness. All this puts Dubai in pole position when it comes to competing for international investments into commercial real estate.
Dubai’s outlook of prosperity and growth
The Dubai commercial real estate market is expected to experience a remarkable compound annual growth rate (CAGR) of 13% over the forecast period (2022-2027). The Dubai economy has been subject to uncertainty in its main non-oil industry drivers. The COVID-19 pandemic has had a significant impact on the travel, hospitality, retail, and real estate sectors. Despite all these challenges, December 2022 concluded on a positive note for Dubai real estate sector.
In response, major real estate groups have implemented relief packages in 2020, including rent relief, deferred payment plans, and waivers of administrative charges, to support their customers and business partners. Furthermore, public and private developers are focused on ensuring the swift execution of ongoing projects to deliver the highest quality product to investors.
Revival of Dubai real estate market
After years of limited supply and decreasing prices, the market has started to recover with a surge in demand for sales. Rental prices have been at a nine-year low up to 2021, but in the last five years, prices have started to rise and stabilise for the first time in half a decade. Consequently, there has been an influx of investors and end-users buying office spaces, with a projected 132% increase in sales in the first eight months of 2023. And it is one of the key reasons to start investing in Dubai real estate market, which can entice other potential investors as well.
Dubai’s total stock of office units stood at nearly 9 million square meters of gross leasable area (GLA) in 2021. Around 70,000 square meters of GLA was added in the second half of 2021, with some of the notable projects including the Obsidier Tower. The majority of the demand for office units came from small units (less than 1,000 square meters) with a preference for CAT A fit-out rather than shell and core space.
UAE government introduced reforms
In an effort to further stimulate the commercial real estate market in Dubai, several new initiatives have been launched, such as the introduction of the One Free Zone Passport, which allows free zone companies to extend their operations to mainland Dubai. These initiatives like this and a few others such as Dubai 2040 Urban Master Plan, which is already entering the second phase will likely further drive demand for offices across the city in the coming years.
In the past, Dubai’s commercial property market saw an oversupply of office space, leading to decreased prices and the shut down of new major commercial developments. However, the increasing demand has absorbed most of this oversupply in recent years. With no new major developments on the horizon, this trend is set to continue, driving up prices and creating a more competitive market.
Increase in commercial (hotel) real estate across Dubai
The emirate of gold continues to be a major player in the Middle Eastern travel market, with its supply and bookings across all travel segments. After the challenging times of the pandemic, Expo 2020 and FIFA World Cup 2022 provided a much-needed boost to the hospitality industry. The effects of these events are already being felt in the economy, with the total number of hotels and similar establishments in Dubai decreasing to 755 in 2022 compared to 1,089 in 2020. The tourism sector added 8% to the country’s GDP in 2022, and the government’s robust new safety measures and initiatives have further solidified Dubai’s position as a safe destination for global travellers.
The Dubai real estate market is highly competitive, with many players vying for a market share. It also has a strong potential for growth, and developers are looking to bring new and lower-cost products to meet the current demand. Evolving technological advancements, such as new proptech solutions, are driving the market in terms of increased transactions and better management of real estate assets. Some major players in the Dubai commercial real estate market include Nakheel Properties, Deyaar, Jabal Omar, Aldar, and Rak Properties. Aldar has also entered Dubai real estate sector in joint venture with Dubai Holdings to develop 9,000 residential units in three communities.
Dubai’s future-oriented commercial real estate projects
One of the world’s most vibrant and innovative cities, Dubai’s booming commercial real estate sector often steals the spotlight. From grand shopping malls to enchanting office towers, commercial projects in Dubai attract businesses and investors from around the world. Recently, Sheikh Mohammed unveiled a staggering $8.7 trillion economic plan, which will impact every aspect of Dubai real estate sector. Here is a closer look at some of Dubai’s most impressive commercial real estate projects.
One of the region’s most prominent new commercial projects is Dubai Square. The 570,000-square-metre mall is larger than over 150 football fields combined and is the world’s largest retail and entertainment destination. Occupying the entire second level of the building is the extravagant mall, offering multiple shopping, dining and entertainment opportunities. The entire property features over 700 stores, 300 restaurants and cafes, a multiscreen cinema complex and more. Dubai Square will also be equipped to accommodate concerts, conferences, conventions and other major corporate events.
Brought to life by the same company behind the iconic Burj Khalifa, the Dubai Creek Tower is another exciting project to hit the market. When completed, the 1822-foot tall tower will be the world’s tallest building. Located above the creek, the tower will consist of nine observatory levels, two restaurant levels and four observation decks, offering breathtaking views of the city and the Arabian Gulf. Other services include retail space, state-of-the-art office space and a marina promenade.
Damac Towers by Paramount is easily one of the most luxurious and memorable places to do business in Dubai. The hotel, residential and commercial project includes three buildings styled after the glamorous Hollywood. The iconic tower complex is home to the world’s first-ever Paramount Hotel, luxuriously appointed apartments and retail space. Other features include a world-class spa and fitness facilities, a grand lobby and conference rooms.
Business Bay is one of the most sought-after commercial projects in the city. Located at the heart of Dubai and surrounded by world-renowned landmarks such as Burj Khalifa and Dubai Canal, Business Bay is a popular destination for those looking to set up business in the city. Covering an area of 64 million square feet, Business Bay is home to many commercial buildings and luxurious homes. It also houses high-end restaurants, international brands and designer stores.
From iconic towers to grand shopping malls, Dubai’s commercial real estate sector is booming.
Whether you are looking to invest or set up a business in Dubai, there is a commercial project for everyone in the city. These are just a few of the stunning commercial real estate projects in Dubai, and alongside many others, they continue to shape the dynamism of the city’s ever-growing economy.
10 promising upcoming commercial real estate projects in 2023
The huge increase in demand comes as Dubai’s property market experiences a post-pandemic surge driven by government-led reforms and initiatives. Dubai is a prosperous city renowned for its iconic skyscrapers, bustling economy and extraordinary hospitality. As a result, it has become a top destination for businesses to establish headquarters. With the influx of investors to the city, it is no surprise that several high-profile commercial construction projects are taking place. Here are ten of the most noteworthy upcoming commercial real estate projects in Dubai:
Burj Dubai Vibe
First, there is the Burj Dubai Vibe. A contemporary retail, office and hotel complex, this innovative project will feature an outdoor marketplace, luxurious garden terraces and a high-end wellness centre. It is due to be unveiled this year and is expected to draw investment from local and international firms.
Al Barsha Mall
The second project is the Al Barsha Mall. A joint venture between the world-renowned shopping centre group Emaar, and Meraas Holding, this mall will be the largest of its kind in the region. With over 500 shops, it is slated to become the premier destination for all kinds of retail.
Island of Arabia
Third is the Island of Arabia. Set to be built on the man-made island of The Pearl, this ambitious project will boast luxurious resorts, a nine-hole golf course, an IMAX theatre and a wide selection of restaurants and cafes. This premium location is sure to draw in visitors from around the world.
Fourth is Bluewaters Island, a luxury resort district on an artificial island connected to the mainland by a pedestrian-only bridge. Bluewater’s Island will feature extravagant properties for sale in Dubai, villas and entertainment centres, including a SeaWorld and a state-of-the-art Ferris wheel.
Jumeirah Garden City
Fifth is Jumeirah Garden City. This mixed-use development will serve as the epicentre of innovation and will feature retail, business and lifestyle spaces including opulent properties for sale in Dubai. With a focus on sustainability and living, this project is set to be a significant part of Dubai’s future.
The sixth project is Dubai Canal. One of the most noteworthy projects in the city, this construction will extend Dubai Creek by 3.2 kilometres. The completion of the canal is expected to bring a plethora of entertainment and business opportunities to the city.
Ithra Dubai Tower
The seventh project is the Ithra Dubai Tower. The third-tallest structure in the city, the Ithra Tower, will be the new headquarters of Ithra Dubai, a global diversified real estate company.
The eighth project is the Dubai Square. This prominent future business and leisure hub will feature diverse shopping and entertainment options.
Dubai Harbour development
The ninth project is the Dubai Harbour development. This enormous complex will offer commercial spaces to cater to every type of business, along with a full range of facilities and amenities.
Dubai Park and Resorts
Last but not least is Dubai Park and Resorts. This grand-scale ambitious project will cover an area of just under 10 million square feet and will have the capacity to accommodate up to 30,000 guests in properties for sale in Dubai.
Dubai commercial real estate market recent developments
Dubai Commercial real estate has seen an astonishing surge in demand during 2022, with an 89 per cent increase in sales value and a 38 per cent increase in units sold compared to the same period in 2021. According to the property brokers in Dubai, the same progress is expected in 2023.
This growth has been driven by a variety of factors, including economic reforms such as 100 per cent foreign ownership, evolving visa initiatives, and the successful management of the pandemic. Additionally, many business owners, both within the country and abroad, have invested in Dubai’s commercial real estate post-pandemic.
As Dubai returned to normal, demand for properties for sale in Dubai, office and retail spaces increased, and more commercial activities have been witnessed around the city. Dubai’s commercial property market will continue to attract local and global businesses worldwide, resulting in increased commercial activities and continued growth. The setting up of global offices by tech giants is a testament to Dubai’s trust in all kinds of businesses, including IT, fintech, e-commerce, and crypto.
Retail spaces as being particularly in demand compared to other commercial real estate sectors in Dubai this year. According to the property agents in Dubai, offices recorded a 19 per cent increase, with spaces in Business Bay and Jumeirah Lake Towers being particularly attractive to enterprises. Meanwhile, according to the property brokers in Dubai retail sales saw a 64 per cent increase compared to last year, with the top areas being International City, Jumeirah Lake Towers and Business Bay.
As Dubai continues to establish itself as a global business hub, many international firms are looking to set up shop in the emirate. This, combined with the new licence growth outstripping renewals, will continue to drive demand for office and retail sales.
In a nutshell
The Dubai real estate sector has seen phenomenal growth over the past few decades, and the commercial sector in Dubai, in particular, has been one of the major drivers of this expansion. As a result of its geographic location, the Emirates has become a hub for international transactions and investments. Dubai, the main commercial metropolis in the region, has become a highly sought-after destination for both local and foreign businesses. This has resulted in a steady growth in the demand for commercial real estate as investors and businesses look to capitalise on the region’s excellent economic conditions. In turn, the future of Dubai commercial real estate is bright.
In terms of trends and opportunities, the future of Dubai commercial real estate is one of continuing growth. Continuing government initiatives and financing large infrastructure projects means that demand is likely to continue to grow in both the short and long term. In addition, the government’s commitment to making the city one of the most business-friendly destinations in the region, through the promotion of foreign investment and a reduction in bureaucratic procedures, alongside an attractive tax system, will only continue to fuel the growth of the sector in the foreseeable future.
The increasing demand for high-quality commercial real estate services means that investment in technology is becoming more important than ever. In this context, developers are focusing on the adoption of augmented reality, the implementation of data analytics and the development of smarter buildings, all in order to establish Dubai as a hub of innovation.
The future of Dubai commercial real estate is one of continuing growth as investors and businesses seek to capitalise on the city’s excellent economic conditions and business-friendly environment. As a result, the sector is likely to experience an influx of new investors, which will facilitate the shift towards more lucrative projects – allowing businesses and investors from across the globe to benefit from the many opportunities in this sector.