During the first quarter, Dubai’s commercial real estate market experienced a significant rise in prices and sales transactions. This growth can be attributed to several factors, including the success of government initiatives such as the green and golden visas and the robust post-pandemic recovery. These programs have attracted foreign investment and skilled talent to the country, while the government’s support for businesses during the pandemic has eased financial pressures.
The green and golden visas attract foreign investment and talent to the country, whilst initiatives to support businesses during the pandemic helped ease the financial burden. The government’s innovative and strategic approach to creating an enterprise-friendly environment has led to a more than 50% increase in new business-license issuance, a driving force behind Dubai’s booming commercial real estate sector.
Dubai’s commercial real estate market saw a sharp increase in sales transactions and prices in the first quarter. Compared to Q1 2022, there were 17% more transactions, whilst the total transacted value increased by 62%. This growth can be attributed to many factors, including government initiatives like the green and golden visas and the strong post-pandemic recovery.
During the first quarter, there was a 28% increase in office transactions, with a 52% increase in transacted value (versus Q1 2022). This surging demand for offices has led to a shortage of quality grade A spaces. The most popular area for office sales was Business Bay, followed by JLT and Dubai Silicon Oasis.
The growing demand within all sectors of the commercial real estate market is a clear indication of Dubai’s ever increasingly business-friendly environment. Compared to Q1 2022, CRC saw a 69% growth in overall buyer leads. The growth in buyer enquiries for retail spaces was particularly pronounced, up 208%, whilst office and warehouse enquiries increased by 47% and 45% respectively. Whilst buyer enquiries surged, a shortage of available commercial properties led to an 11% decrease in new sales listings and a 12% fall in transaction volume during Q1 2023 when compared to Q1 2022.
For the first time in six years, Dubai’s office rents are rebounding and they are increasing at a faster than in London and New York. This is, in part, due to the expansion of global businesses and banks into Dubai, which is fast becoming a financial hub in the Middle East. Ease of business set up, the tax friendly environment and visa reforms are just some of the reasons why entrepreneurs, SMEs and multinationals are likely to continue to relocate or expand to Dubai, giving further support to rental prices.
CRC saw a 15% decline in leasing transactions in the first quarter, with a 6% drop in office space transactions. With the recent growth in rental prices, it’s likely that businesses are extending their existing leases to avoid paying the higher market prices, leading to a drop in transactions. Jumeirah Lake Towers, Business Bay, and Al Quoz emerged as the top communities for retail transactions, followed by Sheikh Zayed Road and Barsha Heights (Tecom).