CRC, Betterhomes Group company and Dubai’s largest commercial real estate agency, released the Q3 2021 Dubai Property Market Report, which provides an overview of Dubai’s commercial property market, looking into both sales and leasing. With prices picking up for the first time in several years, the volume and value of sales transactions increased significantly over the last quarter.
The long-awaited Expo 2020 officially started on October 1st, further increasing positive business sentiment and opening doors to an increasing number of foreign investments which will create additional demand for commercial property.
Commenting on the report Ben Bargh, Director at CRC, said “As we head into the final quarter of the year, it is safe to say that we are seeing major changes in the commercial real estate market. For the first time in over several years, prices are picking up again, with the market making an almost complete recovery, and returning to pre-pandemic levels.”
“Restrictions that were implemented at the same time last year have been heavily lifted, allowing individuals to regain some semblance of normality and have greater trust in the current state of affairs. As such, it is clear that companies are increasingly more optimistic about the state of the market, and therefore resuming normal business activity”, Ben continues. Increasing prices in the market have slightly slowed momentum in Q3 2021, with buyers and tenants shifting to purchase and rent bigger and better commercial properties at fewer numbers.
Looking at the previous three quarters, gives us a good indication of the state of the market before the pandemic, during the pandemic, and now, as we are navigating our way out of it. Transacted value for offices has risen above pre-pandemic levels, dramatically increasing from AED 4,956,140,001 to AED 6,535,537,832, whilst the number of units sold has increased from 1399 in Q3 2019, to 1478 in Q3 2020, to 1736 in Q3 2021.
Total transaction value, DLD (AED)
Transactions for office spaces are primarily in freehold areas such as Business Bay and JLT, which have remained the most desirable places for companies to conduct their business.
The demand was on the upward trajectory for both sales and leasing when it comes to retail in Q3 2021, with a 47% increase in the number of registered buyers. The number of buyer leads has decreased by 18% for office spaces and increased by 61% for warehouses.
The retail industry has grown dramatically, with high numbers of transactions in International City, Business Bay, and JLT. Whilst the overall number of transactions in Arjaan and JVC have been fewer than the top retail communities, it is expected that these communities will see a burst of transactions over the coming months, as it is anticipated that prices will remain low, with a large number of handovers that are expected to happen.
With the economic activities going steadily up, property investors are coming back to the commercial property market, with the number of commercial property investors seeing a year on year increase of 13%. It is expected that more investors will enter the market and continue this upward trend due to the ongoing Expo 2020.
In regards to leasing, there has been a significant increase in the average size of property spaces in last quarter’s leasing deals. A large number of clients are businesses that downsized during the pandemic, who have greater confidence in the market and so are now looking to upgrade again.
Leasing transactions at CRC
Tenants look for larger spaces that are move-in ready, with high-quality fit-outs. As such Grade A buildings are becoming a priority, especially for larger companies. With a lack of supply when it comes to quality buildings, increasing demand for premium office space, and a rise in the number of international businesses in the market, it is expected that rental prices will continue to rise.
For a more detailed insight into the current state of Dubai’s commercial property market, download our report below.