Dubai’s government continues to position Dubai as a global business and financial hub, with a recently announced ($8.7 trillion (32 trillion dirham) economic plan aimed at doubling foreign trade and investment over the next decade. Besides this, Dubai has been trying to maintain its appeal to foreign investors and skilled professionals by implementing legal changes and relaxing social restrictions. For example, at the start of the year, it abolished a 30% tax on alcohol.
Economic growth and increased foreign investment are the top factors contributing to increased commercial real estate transactions in Dubai. Despite a challenging global economic climate, Dubai has seen robust economic growth, resulting in increased transactions in 2022. According to the Government of Dubai, this is evidenced by the 4.6% year-on-year GDP increase to AED307.5 billion in the first nine months of 2022.
In 2022, Dubai experienced significant growth in commercial real estate sales transactions, with demand rising across all sectors, including offices, retail, and warehouses. Commercial sales transactions increased by 32%, and the total value of commercial properties sold increased by 64% compared to the previous year. This positive outlook for investing in Dubai’s real estate market can be attributed to several government measures and initiatives that make the city and the UAE an attractive long-term investment destination.
Office transactions increased significantly in quantity and value in 2022 as a result of strong market demand and a shortage of available, particularly Grade A office space. With regard to 2022, office transactions specifically climbed by 30%, while the total value of transactions increased by 74%. With 945, 711, and 122 offices sold, Business Bay, Jumeirah Lake Towers, and Barsha Heights were the most popular locations for office transactions. Other locations with a large volume of office transactions included Downtown Dubai, Motor City Arjan, Dubai Silicon Oasis, and Emirates Living.
With transactions up 71% and the value of those transactions up 96% in 2022, retail sales transactions recorded enormous growth. The FIFA World Cup, the Golden Visa program, the recovery of the tourism sector, and initiatives to digitize the economy are a few drivers of this surge. International City, Mohammad Bin Rashid City, and Jumeirah Lake Towers saw the highest number of retail transactions, with Dubai Marina, Business Bay, and Deira also seeing considerable activity. This activity is reflected in the Dubai Chamber of Commerce, which had a 69% surge in new members in 2022.
The growth in all sectors of commercial real estate is a clear indication of a stronger business environment in the UAE, particularly in Dubai. We have seen a significant increase in demand for commercial properties compared to Q3 2021, with overall buyer leads increasing The UAE’s strong business environment in 2022 has helped the commercial real estate sector to grow significantly compared to the previous year. CRC has witnessed a significant demand for commercial properties compared to 2021, with overall buyer leads increasing by 37%. A surge in tourism activity and an uptick in new business licenses have precipitated a marked spike in retail property enquiries, with a 115% increase observed. The demand for office spaces and warehouses increased by 23% and 45%, respectively.
In 2022, the number of end-users purchasing commercial properties in Dubai through CRC has risen to 79% as they take advantage of the positive economic sentiment in the region. With more businesses entering the market or expanding to new locations, there is expected to be a shortage of high-quality properties in the future.
Buyers from various countries, including Jordan, the United Kingdom, and India, have impacted Dubai’s commercial real estate market over the years. Indian nationals top the list with a 27% share of total commercial real estate buyers, followed by UK and Jordanian nationals with 10% and 8% shares, respectively. Over the past year, investors from Portugal and Russia contributed 5% and 6% to Dubai’s commercial property investments.
Dubai’s office rents are experiencing a resurgence for the first time in six years, growing faster than in other major cities worldwide. This is due to increased global banks and businesses expanding into the city, known for its extravagant building projects. While the pandemic has sparked discussions about the future demand for office spaces globally, Dubai’s market is standing out even as other financial centres like New York and London are trying to attract employees back to the office. Dubai has brought more people back to offices with adequate policies and initiatives post-pandemic.
In 2022, there was a significant growth of 22% in the number of leads for commercial properties, as well as a similar increase in inquiries for warehouses for rent. This trend is likely due to the growing demand for additional space from retail, e-commerce, and logistics businesses.
In the first half of the year, 537 new companies were registered at the Dubai International Financial Centre (DIFC), resulting in an 11% increase compared to the same period in the previous year. There was a 23% year-on-year increase in newly registered fintech and innovation companies, rising from 406 to 599. New businesses that have been launched in Dubai include Rapyd, the first Israeli company to be regulated in the UAE; Tarabut Gateway, the first regulated Open Banking platform to be licensed by the DFSA; KMMRCE Holdings, a Dubai-based digital-first technology provider, Oneglobal Broking, a specialist international broking company, and ADIB Capital Ltd. for Wealth & Asset Management.